Mickel v. Commissioner

*981OPINION.

Green:

Counsel for the Commissioner contends that the journal entry of May 14, followed by the action of the board of directors on July 10 in correcting the minutes of the meeting of April 3, and the entry in the journal under date of July 15, conclusively show that a cash dividend was originally declared and that the action taken by the directors on July 10 was only an attempt to change the cash dividend into a stock dividend. Careful examination of all of the facts, however, leads to a different conclusion. It is true that the journal entry of May 14, standing alone, might justify a finding that the dividend was a cash dividend, but it is also true that the bookkeeper was instructed to make an entry to reflect a stock dividend, and, even though the bookkeeper had made an entry specifically designating the dividend as a cash dividend, it would nevertheless be a stock dividend, if such was the dividend declared by the directors. At the most, book entries are only evidential and are not always conclusive of the facts they are supposed to reflect. Doyle v. Mitchell Bros. Co., 247 U. S. 179; Appeal of Huning Mercantile Co., 1 B. T. A. 130; Appeal of Chatham & Phenix National Bank, 1 B. T. A. 460; Krieg Tanning Co. v. Commissioner, 4 B. T. A. 1081. Furthermore, it appears that at the time of the meeting of the directors on July 10 none of them knew of the style of the entry of May 14, and the sole reason for the correcting of the minutes of the meeting of April 3 was because it was thought that those minutes, as submitted for approval, did not properly show that a stock dividend had been declared.

On these facts, there can be no doubt, except as to the $100 cash dividend, that the dividend declared on April 3 was a stock dividend, and, therefore, not income to the petitioners.

Final order of redetermmation will be entered after 10 days’ notice, under Bule 50.