RHODES' ESTATE

v.

COMMISSIONER OF INTERNAL REVENUE

PER CURIAM.

On petition for review of a decision of the United States Board of Tax Appeals, it appears from the record that on November 18, 1937, the Carroll Furniture Company of Atlanta, Georgia, declared a cash dividend of $20.00 per share payable on December 18, 1937, to stockholders of record at 12:00 o’clock noon on November 26, 1937. The taxpayer, Herman W. Rhodes, was the record owner of 600 shares of stock of said company on each of the three said dates.

The taxpayer offered to sell his dividend right for $11,925.00 to C. H. Patton of Memphis, Tennessee, an intimate friend. The offer was accepted and on December 7, 1937, Patton borrowed $12,000.00 from a bank for the purpose of making the purchase and pledged the assigned dividend right as collateral for the loan.

The check in payment-of said dividend when issued on December 18, 1939, was made payable to Patton, who indorsed it to the bank from which he had obtained the loan, and the bank stamped the note paid and returned it to Patton.

The question is whether the amount received by the taxpayer from Patton should be treated as ordinary income as held by the Board, or whether such amount constitutes capital gain which is available as an offset against capital losses as the petitioner contends.

In our opinion under the circumstances here present, the sum received by the taxpayer was not capital gain as that phrase is used in Section 117(b) of the Revenue Act of 1936, 49 Stat. 1648, c. 690, 26 U.S.C.A. Int.Rev.Acts, page 873, but was taxable as ordinary income under Section 22(a) of the Revenue Act of 1936, 49 Stat. 1648, c. 690. Compare Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75, 131 A.L.R. 655; Helvering v. Eubank, 311 U.S. 122, 61 S.Ct. 149, 85 L.Ed. 81; Harrison v. Schaffner, 312 U.S. 579, 61 S.Ct. 759, 85 L.Ed. 1055.

The order of the Board is affirmed.