[Letter from Homer L. Bruce to I. H. Kempner, April 8, 1953] Page: 1 of 2
This letter is part of the collection entitled: Harris and Eliza Kempner and was provided to The Portal to Texas History by the Rosenberg Library.
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BAKERBOTTSANDREWS & PARISH
ESPERSON BUILDING
HOUSTON 2
MEXICO CITY OFFICE A ril 1953
PASEO DE LA REFORM NO.1
G-1604-1
Mr. I. H. Kempner,
P. 0. Box 119,
Galveston, Texas.
Dear Mr. Kempner:
I have your letter of April 1 in reference to a
distribution of property by a corporation after it has
appreciated in value. In the case of Sugarland Indus-
tries, I do not believe this would be helpful. Where
property is distributed as a dividend, this is not a sale
by the corporation and it receives no taxable income on
account of the distribution. However, the stockholders
are treated as receiving a dividend equal to the then
value of the property distributed if that value is less
than the accumulated earnings. If that value is greater
than the accumulated earnings, then they are treated as
receiving an ordinary dividend equal to the accumulated
earnings and the excess is applied to a recovery of the
cost of their stock.
However, the accumulated earnings of the Indus-
tries would be reduced only by the cost or other basis of
the land in its hands and not by the total appreciated
value of the property.
I am certain that the Industries has at least
several hundred thousand dollars of accumulated earnings.
A distribution of property of any size to the stockholders
- would therefore be an ordinary dividend to the stockholders
subject to the regular normaland surtax rates.
Yours very truly,6-6
Homer L. Bruce
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Bruce, Homer L. [Letter from Homer L. Bruce to I. H. Kempner, April 8, 1953], letter, April 8, 1953; (https://texashistory.unt.edu/ark:/67531/metapth1059021/m1/1/?rotate=90: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Rosenberg Library.