Garlock, Inc. v. Commissioner

Tannenwald, J.,

concurring: I agree with the result reached by the majority herein solely on the ground that on all the facts, it seems clear to me that there was an agreement (albeit not a formal one) on the part of Camdex either not to vote the preferred shares it retained or to vote such shares in accordance with petitioner’s wishes. On this basis (and without regard to whether there was such an agreement on the part of the other preferred shareholders), petitioner owned “more than 50 percent of the total combined voting power of all classes of stock entitled to vote” within the meaning of sections 957(a) and 958(a). The majority opinion is unclear as to the significance which it attaches to the fact that petitioner’s representatives constituted a majority of the board of directors of S.A. during the taxable years involved. In my opinion, that fact represents nothing more than some evidence that there was such an agreement; it does not constitute an independent basis for concluding that the requisite control existed. Given the particular fact situation involved herein and the ultimate conclusion flowing therefrom, it remains for future decisions to determine whether the totality of section 1.957-1 (b) (2) of respondent’s regulations is a valid implementation of the statutory provisions.

DkeNNEN, Naum, FeatheRSton, and Sterrett, //., agree with this concurring opinion.