dissenting: Upon the basis of the decision of the Supreme Court in American National Co. v. United States, 274 U. S. 99; 47 Sup. Ct. 520; 6 Am. Fed. Tax Rep. 6747, I concur in the decision that the bonus to be paid the employees of the petitioner was a deduction in the fiscal year ended January 31, 1919.
I can not, however, agree with the result reached upon the second point involved. The agreement between the employees and the *1100company appears to me to be no more than an accepted subscription agreement. Certainly there was a meeting of the minds of the parties, and certainly there was a contract; but it does not follow that the employees thereby became stockholders of the corporation or that the amount of their unpaid subscriptions became accounts receivable. Nor do we know that they ever would become stockholders. For example, under parapraph 7 of the agreement, if an employee severed his relationship with the company, his only right was to recover the “ net credit accrued to you on this subscription and your subscription will thereupon be canceled with no further interest to you therein.” Entirely aside from the language used in designating the agreement as a subscription, how is the result consistent with the theory that the subscriber was the owner of the stock? If he was he would be entitled to pay his obligation to the company and receive his stock, for there was no agreement to resell. What is the purpose and effect of paragraph 8th if the employee owns the stock? What is the meaning of the last paragraph of the contract and especially of the words of limitation contained in the last sentence ?
That dividends should be credited and interest debited on the balance due seems an equitable arrangement for the protection of both parties, but is far from establishing that the subscriber owned the stock. My opinion is that we have here only an executory contract for the purchase of stock under which the subscribers become stockholders only when the subscription price is paid. I therefore conclude that the respondent was correct when ho included in invested capital only the amounts paid on these subscriptions.