Hugo Black

“ That tax was designed to reach profits held by the corporation which as a consequence could not be taxed as dividends in the hands of stockholders. An intracorporate agreement is simply one way of keeping profits in the corporation's treasury so that the tax collector cannot reach them. ”

“ We think that the preferred stock certificates are not the kind of contracts which entitle a corporation to allowance of credit under Subdivision (c) (1) . In our view that Subdivision must be read in the light of § 26 (c) and the Act as a whole, and when thus read, is confined to contracts made with creditors and does not extend to restrictions imposed within the body corporate. In Helvering v. Northwest Steel Rolling Mills, 311 U.S. 46, 61 S.Ct. 109, 85 L.Ed. 29, the question before us was whether § 26 (c) (1) allows a credit where the payment of dividends is prohibited by statute. ”