In Commissioner v. Fink,' the Supreme Court held that a dominant shareholder who voluntarily surrenders a portion of his shares to the corporation, while retaining control, does not sustain an immediate loss deductible for income tax purposes. Such a surrender of stock must be treated as a contribution to capital, the basis of the surrendered shares being reallocated to the remaining shares held and loss or gain recognized only when the shareholder disposes of the remaining shares.
"Unitary Theory of Stock Ownership Fink v. Commissioner,"
Akron Tax Journal: Vol. 5
, Article 15.
Available at: https://ideaexchange.uakron.edu/akrontaxjournal/vol5/iss1/15