Barrister News, 1960 Spring, V. 8 No. 1

Dublin Core


Barrister News, 1960 Spring, V. 8 No. 1


St. Mary's University School of Law


Tax Option Corporations, Silver Jubilee Celebrated, Fraternities, Should a Lawyer Enter Politics?, Judge Quin Succumbs, Estate Planning, 1960 Senior Law Class, Dean's List Spring 1960


St. Mary's University School of Law


St. Mary's University School of Law San Antonio Texas, St. Mary's University School of Law, Sarita Kenedy Law Library




Frank Baker, Edward Vincent Dylla, John Milton Flatten Jr., Bill Richards, Thomas Joseph, Jim Moss, Tom Priolo, C. David Evans, Royal Adams, Richard Wilson, Frank Flatten, Frank Southers, Doug Newton




Barrister News




English, en-US







PDF Search





Frank Baker, local prominent
attorney was born in Victoria
Texas in 1924. He attended
St. Mary's Univer'Sity ,;nd St.
Mary's Univ"Crsity School of
Law where he was graduated
in 1949. He is a Professor at
St. Mary's Law School, teaching Federal Taxation, Contracts, Sales and other related
subjects. He .:s a member of
Defta Theta Phi, national legal
fraternity, a member of the
San Antonio and American Bar
Association and the State Bar
of Texas.

San Antonio, Texas

Fronk Boker

"Tax option corporations" or "pseudo corporations" as they
have become known popularly are those corporations that elect
to have their income and losses borne directly by their shareholders for Federal income tax purposes. They are-or should
be-real corporations under the general civil law for all other
purposes and with the usual incidents of independent existence,
limited liability, concentration of management, transfer of ownership and survival.
Since "tax option corporations" were first introduced only
by Public Law 8 5-8 66 of the 85th Congress becoming effective
for taxable years beginning after December 3 1, 19 57, as Section
64 of the Technical Amendments Act of 19 58, there is a paucity
of interpretive material and no cases to tell the taxpayer and
his counsel how to construe this unusual piece of legislation.
There are, however, the statutes themselves, codified as Sections
1371 to 1377 and Section 6037 of the Internal Revenue Code of
1954, the regulations promulgated by the Treasury Department
in T. D. 6432 adopted December 18, 1959, codified as Regulations
Sections 1.13 71-1 to 1.13 77-3 of Ti tie 2 6 of the Code of Federal
Regulations, four Treasury Information Releases, and three Revenue
Rulings to which thEy may turn for guidance. In addition, there
are well defined concepts in accounting, and in partnership income taxation that should be of help in understanding the rules
laid down by the legislators.
Already, Congress has seen fit to ammd Subchapter S in order
to expunge two apparently unintended results. Both changes
were inserted into I-L R. 47 by the Senate Finance Committee
in Senate Report No. 913 and became part of Public Law 86-376
of the 86th Congress. Section 1371 (a) (1) was modified by a
· new subsection (c) so that stock held by a husband and wife as
joint tenants, tenants in common, tenants by the entirety or as
community property shall be considered as held by one shareholder.
It is effective for taxable years beginning after December 31, 1959.
Section 1374 (b) was clarifi-ed so that a deceased sharerolder will
not be denied his pro rata share of the small business corporations
net operating loss. It became effective by terms of the Act on
the day after enactment, which effective date was September 24,
19 59.
In Senate Report No. 1983 which favorably reported H. R.
8381, The Technical Amendments Act of 1958. the Senate
Finance Committee said it believed the addition of a provision
permitting the pass through of corporate profits and losses to the
shareholders was desirable because it permits businesses to sel- ct
the form of business organization desired without the necessity
of taking into account major differences in tax consequence. The
Committee also felt that it should be of substantial aid to small
businesses; and primarily to those individuals who have marginal
tax r,ates below the 52 % corporate rate-or the 3 0 % rate where
the corporation earns not over $25,000.00-when the earnings
are left in the business. Where the earnings are distributed (and
are in excess of what may be properly classified as salary payments),
the bmefit will extend to individuals with somewhat higher rates
since in that case a double tax is removed. The provision will
also be of substantial benefit to small corporations realizing losses
for a period of years where there is no way of offsetting these
losses against taxable income at the corporate level, but the shareholders involved have other income which can be offset against
these losses. The Finance Committee Report, from which these
ideas were drawn, may b? found in the Internal Revenue publication cited 1958-3CB beginn ing at page 922, the particular matters
being reported at page 1008. Besides these advantages recognized
by the Committee, there are others which become apparent upon
considering the statutes; and, as always there are the attendant
disadvantages. Some of each will be borne out later.
Although designed to help small business, it is perhaps misleading to refer to the subject sections of the Code as small
business legislation. Section 13 71 defines "small business corporation", and nowhere in the definition is there any limit on the
amount of assets or capital that may be employed. Thus it is
possible to have a tax option corporation as small as the sma 1lest
allowed by the sovereignty granting it existence-in Texas, for
example, it is $1,000.00 under Art. 3.0 5 of the Business Corporation Act-and as large as the largest allowed by such sovereigntyin Texas, again for example, there is no ceiling as long as all the
other statlitory requirements are met. These are that the corporation must: (I) be a domestic corporation (which is defined in
(COntinued on page 3)

Justice James Norvell (left) presents the James Norvell Moot Court
Fronk R. Southers, (center l and Thomas E. "Joseph (right l .

The Second Annual Institute
on Estate Planning and Federal
Taxation was held on May 12th
and 13th at the Hilton Hotel
in San Antonio. The Institute
was sponsored by the St. Mary's
University School of Law and
the San Antonio Bar Association.
The Institute was devised as a
means of obtaining the best professional advice and thinking in
the fidd of estate planning and
federal taxation.
This Institute has gained national prominence. Advance publicity was gained through many
national journals in the field. All
of the speakers were men of national reputation. Registrations
were received from throughout
the Southwest and nearly all
parts of the country.
In addition to the daily morning and afternoon sessions, each
of which was followed by question and answer periods, three
social events were held for registrants and participants. On
Wednesday, May 11th, a formal
party was held at the San Antonio Country Club, sponsored
by the San Antonio Bar Association Auxiliary. On Thursday
evening a beer and barbecue
party was held at the Lone Star
Brewery. Following the last ses-

Representing St. Mary's University at the Junior Bar Association Moot Court Competition in Houston are Frank R.
Southers, Thomas Joseph and
Fred Galindo. These contestants
were selected at the St. Mary's
University Moot Court Competition argued before Civil Appeals Justice Walter Loughridge
and Attorney Ed Finck who
served as Justices of the Moot
Supreme Court.
Ed Finck in speaking for the
court indicated that the courtroom demeanor, briefs, and oral
argument of each of the contestants would do credit to any
practicing attorney.
These competitors were C.
Ray Crites v. Fred Galindo,
Frank R . Scuthers v. Robert
Bambace; Tom Priolo v. Thomas
Joseph: and Emmett Cater v.
J oc Villereal.
Named recepients of the annual Judge James R. Norvell
Awards were first place winner
Frank R. Southers and second
place winner Thomas Joseph.

Awards to

sion on Friday a buffet Mexican
dinner and cocktail party was
held at La Villita. Much of the
value to the registrants was
gained at these social meetings
where there was an opportunity
to meet the speakers in an informal manner and discuss any
problems that they might have
personally encountered.
The Institute was geared to
the practitioner-attorneys, accountants, trust officers, and life
underwriters. The talks were not
of a highly technical nature, but
neither were they a mere basic
introduction to the topics. The
emphasis was on the latest idea~
and techniques in estate planning
and federal taxation, with .the
ever present idea of serving the
cli-ents interest in the best manner available.
There were several displays at
th Institute sponsored by N ationa! Publishing houses, notably
Prentice-Hall, to illustrate the
latest materials available to the
The planning, preparation and
conduct of the meeting was under the direction of Stanley
Schoenbaum, Chairman, Institute on Estate Planning and Taxarion, St. Mary's University
School of Law. A great deal of
assistance was provided by Mr .
Carroll ·sierk, Professor of Taxarion, St. Mary's University
School of Law. The registration
(Continued en page 4)

A St. Mary's University graduate is new judge of the 57th
District Court.
Solomon Casseb, Jr., 45, was
appointed by Governor Price
Danid to fill the unexpired term
of Judge C. K. Quin, who died
in office. Casseb's interim appointment expires Jan. 1.
Casseb was born in San Anton:o. He received his "bache~or
of arts degree from St. Mary's
and his law degree from Texas
He was admitted to the bar
in 1938 and practices as a genera!. civil attorney in the firm
of Baskin, Casseb & Casseb.
He is married to the former
Adeles Younes, also of San Antonio, and they have three sons,
aged 7 to 12. Casseb is a member of St. Paul's Catholic
. Church and is active in the local
bar and Delta Theta Phi, national legal fraternity.

Projected plans for a St.
Mary's Law Center calling for
facilities adequate for 200 day
students and 150 night students
within five years and a library
containing 70,000 v o I u m n s
within 10 years were given by
Dean Ernst A. Raba of St.
Mary's School of Law at the
Silver Jubilee of the School of
Law at an Awards Luncheon
Thursday, May 5·, in the Gunter
Dean Raba was the principle
speaker at the annual Law Day
celebration with the Justices of
the Texas Supreme Court and'
the Court of Cr- minal Appeals
as featured guests.
Included in. the awards prest:nted at the luncl-ieon were the
Third Annual Gavel Award to
Judge Joe E. Hutcheson, Jr. of
the U. S. Court of Appeals,
Fifth Judicial Circuit, New Or~
leans, La., and the annual St.
Thomas More A ward to ]. F.
Whitehurst of Corpus Christi.
In projecting "The Blueprint
for the School o.f Law", Dean
Raba said, "San Antonio, The
Bar Association and St. Mary's
University deserve such a proposed Law Center and the people should have it. The School
of Law has outgrown the local
concept and must now think on
a regional basis."
"We would like to be the
test ground for research into
Municipal, Construction and
Homebuilding J urispurdence. We
are projecting a United StatesMexico Institute for there is
much room for expansion into
comparative law here in San
Antonio," the Dean said.
"The location of the Law
Center is under study by a development committee of ,... the
Board of Trustees," Dean Raba
said. "A minimum of $300,000
would suffice which may be
raised by capital endowment. If
this is not possible, we would
like to have the organizations
most affected to underwrite the
annual endowment," he said.
The De'an also outlined a
three point program which
would place more rigid requirements for entrance into the
School of Law. "We will require
more investigation into the
background of students, each
wculd ce screened by a faculty
committee and applicants will
be required to take the Law
School admission tests", he said.
Emmett Cater, president of
the Barristers Club, served as
Master of Ceremonies for the
luncheon and the Very. Rev.
Walter ]. Buehler, S.M., President of St. Mary's University,
delivered the welcoming address.
The Gavel Award was presented to Judge Hutcheson as
. "an outstanding jurist in recognition of his ccntributions to
the democratic process" and the
St. More A ward was given to
Mr. Whitehurst "for his deep
and continuing interrst in the
School of Law".
Law students receiving awards
in the form of scholarships were
Luther Rutherford, the annual
Arthur Domanque Award for
writing the "most outstanding
(Continued on page 3)

Page Two



"A Professional Legal Publication"
Edited and Published by the Barristers
Student Bar Association St. Mary's University School of Law
San Antonio, Texas
Affiliated with American Law Student Association
Winner of second place, Offset Division, A.L.S.A .
Newspaper Contest, 1957, New York




A keen mind, a wry grm and
a bottcmless capacity for get-

Editorial Board
Editor in Chief ------------------------------------------ Edward Vincent Dylla
Managing Editor ____ _ ____ -------------------------- John Milton Flatten Jr.
_ ___
Feature Editor ____ ------------------------------------------------------- Bill Richards
Richard Wilson
Frank Flatten
Frank Southers
Doug Newton

Thomas Joseph
Jim Moss
Tom Priolo
C. David Evans
Royal Adams

Should a lawyer enter politics? This question when asked of
most practicing attorneys brings the resounding answer of YES!
Therefore in order for this to be a really pertinent question it
should be worded in the following manner; should a lawyer enter
actively into major politics? To enter actively means to either
manage a campaign or to seek an office of either national, statewide or local importance. At first blush the logical answer to this
second question would also seem to be a resounding YES. However much thought should be had upon this phas.e of the question.
A lawyer practices law. A politician does not. Any person who
itics active 1 without acquir:ng the
t h m k s t h at h e can enter po 1
status of a "politician" is foolish. Therefore it follows that if a
east for a time give
1awyer enters po I1tics active 1 h e must, at 1
up t h e practice o f law. Of course, one who campaigns for the
JU d iciary or a re 1
ated office h as a different sort of law practice
in mind and should not be discouraged from this pract!ce.

ting things done, best characterizes Carlos Cadena, well-liked
and able part-time professor at
St. Mary's Univers:ty Law

Mr. Cadena's career in law
began in his native San Antonio after his graduation from
the University of Texas and in
1940, Texas University Law
School. When asked whether
there were any achivements in
schol thato he was particularly
proud of, he quipped, "I once
busted thirteen out of fifteen
hours." However, his scholastic
accomplishmmts seem to indicate otherwis·e, as he was a member of the national honorary society of the Order of Coif,
which is open only to those students who are in the top ten
percent of the school; he was
a1 stu d ent ed itor of t h e Texas
Law Review his senior year, a
· b
JO open on y to t ose possessing
t h e h ig h est degree of legal accomp 1 h ment w h i Ie in law

Phi Delta Phi

Delta Theta Phi

Tarlton Inn initiated nine new
members at impressive ceremonies in the Fourth Court of
Civil Appeals Courtroom on
April 13, 1960 with Justice H .
D. Barrow, Justice W. 0. Murray, Former Bexar County District Attorney Hubert Green,
Jr., Professor James N . Castleberry, Jr., and Professor Frank
J. Greene performing the ritual
with the assistance of Pledgemaster William Burke, Jr.
The new members are T. B.
Boyd, F. R. Clark, S. L. Coulter
R . L. Joseph, G. W . Lederer, J.
H. Leger, A. A. Pena, C . T. Stochandske, and P. Torres, Jr., all
of whom celebrated their honor
with the "old hands" and Barrister members at the Old Heidelberg Inn with a cocktail party.
Retiring officers for the
Spring Semester, 1960 are C.
David Evans, Magistrar; Frank
R. Southers, Exchequer; ]arne~
Lewis, Clerk; and Billy Richards,
Three Tarlton Inn members

swept the
St. Mary's Moot
Court Competition, with Frank
R . Southers winning first place,
Thomas Joseph taking second
place, and C. Ray Crites holding third place.





Every la_wyer should be ready to do his part of necessary public
Achievement Award to the Outservice. And almost any lawyer will tell you that an attorney
In 1943 he went into the Air standing Phi Delta Phi of 1960
in public office is basically more qualified to be of public service Force where he served until 1946. has been presented to Sam Egthan any other person for many reasons. Most offices of public Upon his 'discharge he practiced ger, ex-Magistrar of Tarlton
service have legal and legal related problems, problems a laY-_ -,, - - - - - - .
Inn who currently tops the
- -=,--- - -.,l...-J!=> .. ,n·'· List w-ith
person can deal :vith but which a lawyer can handle with ease.
This is most easily seen in the legislative branches of the governhighest scholastic average.
ment. Therefore it cannot be denied that a lawyer can be very
The Tarlton Inn Award of
effective in public office. However, can a lawyer who is in
1960 to the Outstanding Gradpublic office maintain a practice of law adequate enough to
uating Senior has been presented
put him truly in the role of a "whole" lawyer? It is true that
to Frank R. Southers.
since most political offices ar.e not known for their pecuniary
The Tarlton Inn Award for
va 1
ue, most Iega 11 y trained po Iiticos find it necessary to maintain a law office, either with a . firm (those who are fortunate)
the Outstanding Freshman of
or a private practice, in order to exist. But are they truly prac1960 has been presented to AI
tieing the profession which took years of preparation to underLeopold for his scholastic
A local well known attorney once said, "if the lawyer wants
to enter politics actively, and yet practice law, he is foolish if
he does. not place one over the other and devote most, if not
all of his t ime to his preference". He meant simply that one
must not depend upon both for support, but must derive total
support from one, leaving the other as a mere hobby or sideline. The old adage, "the law is a jealous mistress, and one
can serve no other" fits most aptly here. A lawyer should
be dedicated to his profession, and therefore work to the best
of his ability and knowledge for the profession. The law by
its nature demands a lawyer who is thinking constantly of
methods to do things better and make more efficient laws. In
this manner one becomes a "whole lawyer". One cannot be
a "whole lawyer" by "coasting" or by being the so called
"form book lawyer". Since a politician .would not have enough
time to really think things out he would soon evolve into that type
of a lawyer.
Therefore a lawyer should not enter actively into major politics
unless he is prepared to withdraw from or sharply curtail his practice of law so that it becomes a mere sideline.

(Continued on page 3)

~·'' ·Sot,.~. <·~~·
. ·.
Mr. Carlos Cadena

in Mexico for a short time,
only to return once again to San
Antonio where he joined the
City Attorney's office as an Assistant Attorney. In 1952 Mr.
Cadena began teaching full-time,
although he had taught parttime since 1948. Mr. Cadena became City Attorney in 1954 .
and even with his burdensome
job there, he has still managed
to teach at least one course a
semester. Although his primary
interests are Constitutional and
Municipal law with its many
sub-fielc!s such as zoning and
condemnation, he has also taught
the property series, sales, equity,
labor law and wills.
Mr. Cadena is a member of
Phi Delta Phi, the American .
Texas and San Antonio Bar As~
sociatio~s. In his recreation hdurs
he likes to bowl, play golf or engage in a friendly game of chess.
He resides here in the city with
his wife and two small children.

C. David Evans, (Center) Magister of the Tarleton Inn of Phi Delta Phi, points out
the law to fellow officers (Left to Right) Billy F. Richards, Historian; James Lewis,
Secretary; and fr.ank R. Southers, Exchequer.

May 5, 1960, the School of
Law's Silver Jubilee and Annual
Law Day celebration, was also
an event packed day for brothers of Bickett senate. Besides
participating in the School of
Law's actlV!tles, Brothers of
Bickett Senate designated this
occasion to observe Delta Theta
Phi's Founders Day, to celebrate
Bickett Senate's Tenth Anniversary as a student senate, and
to initiate new members and
elect officers. The initiation of
new members and election of
officers took place during the
time interval between the luncheon and the cocktail party. The
day was brought to a festive
close with the Founders day and
Tenth Anniversary celebration
held at the Insurance Club.
Congratulations to Joe Chacon, Frances Cordes, Alfonso
Davila, Fred Galindo, Rudolph
Georges, Hugh Paterson and
Richard Wilson for choosing our
The new officers are: Royal
Adams, Dean; Michael Brown,
Vice Dean; Hugh Paterson,
Clerk of Rolls; Charles Dickenson, Clerk of Exch.; Richard
Wilson, Master of Ritual; Benton Davies, Bailiff and Raymond Wietzel, Tribune.
The rush activities for our
new members included a cocktail party held at the Gunter
Hotel and a stag party held
at a member's fashionable suburban home at which broiled
hamburgers and liquor trimmings were served. During the
cocktail party the alumni members and officers of the student
senate adjourned to the Texas

St. Mary's is indeed fortunate
to have numbered among its
faculty a man of Mr. Cadena's
ability and experience.

Three Way Conference
. .. between attorney, client and one of
our experienced Trust Department officers
will open the door to new understanding
of the many advantages offered by a
Corporate Trustee in rhe sound handling
of an estate . There s no obligation in such
a conference.

430 Solidad St reet
between Martin & Pecan Streets






Page Three

TAXSection 7701(a) (4) to mean
a corporation created under the
law of the United States or of
any State or Territory);
( 2) not be a member of an
affiliated group (for which a
consolidated return may be filed,
and defined roughly as en~ of a
chain of corporations bound together through a parent owning
at least 8 0% of all voting stock
an.d at least 80 % of all nonvoting stock) ;
( 3) not have more than 10
shareholders (but since a husband and wife having common
ownership as previously noted
are considered to be one shareholder, there actually may be -as
many as 20 shareholders);
( 4) not have as a shareholder
a person (other than an estate)
who is not an individual (thus
trusts, partnerships and corporations may not own stock in a
tax option corporation) ;
( 5) not have a nonresident
alien as a shareholder; and
( 6) not have more than one
class of stock (which, according to Regulations Section 1.371
(g), means that only issued and
outstanding stock is considered
in determining whether the corporation has mor·e than one class
of stock for purposes of this
section; that treasury stock and
unissued stock of a different class
than that held by the shareholders will not disqualify the
corporation; that the outstanding shares must be identical with
respect to the rights and inter.ests
which they convey in the control, profits and assets of the
corporation; but that if two or
more groups of shares are identical in every respect except of
directors in a number proportionate to the number of shares
in each group, they are considered one class of stock).
In order to avail itself of the
Act, the corporation must make
an affirmative election with the
una'n imous consent of the shareholders. The manner of making
the election is detailed in Section
13 72 of the Code, Section
1.1372-2 of the Regulations, and
the instructions on Form 2 55 3.
Briefly, Form 2 55 3 must be completed and filed with the District
Director of Internal Revenue for
the district in which the corporation's principal place of business
or principal office or agency is
located, and it must be filed during the first calendar month of
the taxable year or during the
last month of the preceding taxable year.
There is no o.fficial form for
the shareholders' statement of

consent that must accompany
the election when filed. However, the instructions on Form
2 5 5 3 and the Regulations in Section 1.1372-3 merely require
that the writing set forth the
name and address of the corporation anl of the shareholder, the
number of shares owned, and
the date of acquisition. It must
also contain a declaration of consent and be signed by the taxpayer, guardian, executor or administrator as the case may be.
All shareholders may be joined
in one instrument.
If a person becomes a new
shareholder after the beginning
of the taxable year, he shall
file a similar consent, showing,
also, from whom the shares wen?
acquired. The consent of a new
shareholder must be filed within
3 0 days after acquiring the
stock; however, the 30 day period does not begin to run for
an 'Cstate until the executor or
administrator has qualified, but
in no event shall such period
begin more than 30 days after
the close of the year in which
the estate became a shareholder.
It is important to keep these
consent requirements in mind because an election is not valid
without consent. Also, .an election once made may be terminated by failure of the new shareholder to consent.
Once the election is made, it
is good for the entire taxable
year for which it is made and for
ensuing years until terminated.
Thus, an election does not have
to be made annually. Section
13 72 (e) of the Code treats the
subject of termination. Succinctly, the election terminates if:
( 1 ) new shareholders do not
( 2) an express revocation is
filed with unanimous consent of
the shareholders;
( 3 ) the corporation ceases to
be a small business corporation
(by having 11 shareholders, for
( 4) the corporation derives
more than SO% of its gross receipts from sources outside the
United States; or
( 5) the corporation derives
more than 20% of its gross recepits from so-called personal
holding company income; that
is, royalties, rents, dividends, interest, annuities, and gains from
sales and exchanges of stock and
securities (and note that whereas Section 543 I. R. C. excludes
rents from personal holding
company income if they comprise 50 % or more of the gross
income, the instant section does


LAW DAYpaper in the field of torts and
workmen's compensation"; Peter
Plumb, the Farmer's Insurance
Scholarship; Frederico Galindo
th~ Mary San tee A ward; and
Raymond A. Weitzel, the $175
Farmer's Insurance Award .
Other awards were presented
to AI Leopold, the Phi Delta
Phi award as outstanding freshman; Samuel Egger, outstanding
Phi Delta Phi; and to Frank
Southers, the Phi Delta Phi award
as outstanding graduate. The
Judge Leslie C. Merrem Award
was presented to Frank Y. Hill.
The Annual Judge James
Norvell Moot Court Competition Award was presented to
Frank Southers and Thomas Joseph for their appellate argument on a competitive basis with
other students at the School of
Law. The awards were presented
by Judge Norvell.
The two award winners will
compete in Houston against
Southern Methodist, Texas University, University of Houston
and the South Texas College of
Law, for the annual moot court
competition sponsored by the
State Junior Bar Association at
the State Bar Convention to be
held on July 3.
The Silver Jubilee celebration
began in the morning with an
Academic Procession to St.
Mary's Church followed by a
Solemn High Mass. The sermon,
entitled "The Natural Law", was
given by Father Louis J. Blume,
former president of St. Mary's
University and now president of
Chaminade Co II e g e. Father
Blume substituted for the the
Most Rev. Sidney Mathew Metzger, Bishop of El Paso, who was
unable to attend the celeb:ration.
Following the luncheon a. reception and cocktail party was
held, sponsored by the Delta
Theta Phi and Phi Delta Phi
fraternities, with Father Buehler
serving as host.
Honored guests of the reception and cocktail party were
living faculty members of the
San Antonio Bar Association
School of Law, who were presented awrds of appr·e ciation by
Henry B. Dielmann, the first
Dean of the School of Law.
Recipients were Arley V.
Knight, W. F. Nowlin, Mr. Dielmann, Leo Brewer, John D.
Wheeler, Lucian L. Morrison, all
of San Antonio, and C. 0. Wolfe
of San Francisco, Calif. Deceased members of the original
(Continued on page 8)

Newly elected officers of the Delta Theta Phi Low Fraternity pause durin9 the
cocktail party to be photographed . They ore !left to right) Roy Weitzel, Tr1bune;
Richard Wilson, Moster of the Ritual; Hugh Patterson, Clerk of the Rolls; Carroll
Sierk, Moderator; S. Benton Davies, Bailiff; Mike Brown, Vice-Dean; Charlie Dickenson,

Exchequer; Royal Adams, Dean.

DELTA THETA PHIRoom for a short period, to
initiate Charles W. Anderson,
County Judge; S. Benton Davies, County Court at Law Judge
and Mr. Arthur Carney Lesher
Jr., a prominent Houston attorney and member of the Law
School's Board of Trustees as
Honorary Members of Delta

Theta Phi.
Special thanks are extended to
Brother Arthur Domangue for
his generosity in inviting the
rushees and members as his
guests to the Swank Club following the cocktail party and to
Brother Solomon Casseb Jr. for
delivering the · rush address.
(Continued on page 7)

- - - - - - - - - - - · M e m b e r Federal Deposit Insurance Corporation

The Frost Bank Trust Department
is proud of its history of service to
Texas attorneys and their clients.
• Administration of Testamentary and Living Trusts
e Administration of Estates as Executor or Administrator
e Custodial Agency Services
• Investment Advisory Agency Services

• Trustee under Bond or Debenture Issues
• Administration of ·Pension and Profit Sharing Trusts
• Bond and Coupon Paying Agency Services
• Stock Transfer Services




When an attorney appoints Bexar County National Bank as the executor
and trustee of an estate, he does so with the assurance that all matters
will be judged impartially, that the bank will be on the job always- continuing to work hand in hand with the estate's attorney on all legal







Page Four

TAXnot make such an exception;
however, in T. I. R. No. 113,
November 26, 1958, the Internal Revenue Service said inccme from the operation of a
hotel or motel is not considered
rent, presumably because the sale
of personal services is also involved.)
In every case but one, the
termination is effective commencing with the year in which
the event occurs. Where an express revocation is filed after
the first month of the taxable
year, the termination is effective
the following year. In all cases,
the termination is effective for
all subsequent years until a new
election is made. To discourage
the practice of changing back
and forth, I. R. C. Section 13 72
(f) provides that the corporation and any successor corporation is not eligible to make an
election for five years, unless
the Secretary of. the Treasury
Now, to illustrate the mechanics of some aspects of tax
option corporations, suppose an
hypothetical situation. An old
corporation having two equal
shareholders who each purchased
his shares for $1,000.00; and
having an earned surplus of
$5,000.00; having an unused net
operating loss of $4,000.00 for
1958; and net earnings of $20,000.00, including $3,000.00 of
net long term capital gains, for
the fiscal year ending February
29, 1960; makes a valid election
for such year. It pays monthly
salaries of $1,2 50.00 each to the
shareholders, who are officers.
and makes other cash distributiOI1s to each totaling $7,~00 . 00
before December 3 1, 19 59.
Tne corporation will file Form
1120-S by May 15, 1960, which
is the 15th day of the third
month after the close of the year.
This is the "U.S. Small Business
Corporation Return of Income"
which is similar in appearance
to the usual corporation return,
Form 1120. However, since the
corporation pays no tax, there
is no schedule for tax computations. The form, therefore, reveals that the tax option corporation is merely a reporting
agency much like a partnership.
Each shareholder will file a
Form 1040, "U. S. Individual
Income Tax Return" by April
1 5, 196 0. Each on the cash basis
will include in his income for
calendar year 19 59, salary in the
amount of $12,500.00 because
it is compensation for services
(Section 61 (a) (1) IRC), and
$7,500.00 because it is a distri-

bution of prop~rty (Section
3 01 (c) IRC) and a dividend as
defined by Section 316 IRC. It
will be noted, though, that a portion of the $7,500.00 is treated
as a long term capital gain under
Section 1375 (a) (1) IRC. Consequently, the shareholder may
offset such capital gains against
any capital losses he may have
from other sources (Section
1211 (b) IRC) ; they are subject
to the 50 '/r· deduction (Section
1202 IRC); and to the alternative tax (Section 1201 (b)).
Each shareholder will report
for the year 1960 his pro rata
part of the undistributed taxable
income of the corporation for
the year ended February 2 9,
1960. (Section 1373 IRC). In
ether words, each will report onehalf of $20,000.00 less $15,000.00, or $2,5 00.00. Part is capital gain.
The proportion of the $20,000.00 that will be treated as
long term capital gain is described in Section 1.1375-1 (b) and
(c) of the Regulations. The
formula prescribed therein is:
The pro rata share is the amount
which bears the same ratio to
the less·er of the excess of the
corporation's net long term capital gain over its net short term
capital loss for the taxable year
or the corporation's taxable income for the taxable year (because of the limitation in Section 1375 (a) ( 1) IRC) as the
amount of dividends from earnings and profits of the current
taxable year included in such
shareholder's gross income' bears
to the amount of dividends from
earnings and profits of the current taxable year included in
the gross income of all shareholders during such taxable yeal',
Using the figures from the hypothet, that would be: X/$3,000
X $10,000/$20,000 =
Then to the total amount of the
shareholder's pro rata share of
long term capital gainst must be
allocated ratably to each of his
taxable years during which he
received a distribution. Since under Code Section 13 73 (b) the
corporation's undistributed taxable income is treated as if it
were a dividend actually distributed on the last day of the
taxable year of the corporation,
there are two years involved in
this case. For the calendar year
19 59, the shareholder would recognize NLTCG of $7,500/
$10,000 x $1,500 or $1,125. Naturally, the amount for 1960
would be $2,500/$10,000 x
$1,500 or $375.
For the year ending February
29, 1960, the corporation may

deduct officers' salaries, $3 0,000
(since Reg. Sec. 1.1372-1 (c)
( 1) states that except as otherwise provided, taxable income of
an electing small business corporation is computed in the same
manner that it would have been
had no election been made) ;
but it may not deduct the net
operating loss carry over of IRC
Section 172 (because Section
13 7 3 (d) ( 1) expressly prohibit'
it.) It is possible, therefore, for
the corporation to lose the benefit of the $4,000.00 deduction
unless it terminates its eliection
before the expiration of the 5
year carry over period.
It is manifest that by the tax
option corporation system the
shareholders have been able to
time the incidence of some of
their income. This is perhaps one
of the more important byproducts of the election. It is
even more flexible than the partnership device. Formerly, it was
the accepted practice to form
a partnership with a fiscal year
different from that of the partners in order to defer income.
A partner takes into income his
share of the partnership profits
and losses for the taxable year
of the partnership ending within
or with the taxable year of the
partner. In other words, if this
had been a partnership instead
of a corporation each shareholder
would have reported $23,000 in
his individual return for 1960,
(salary $15,000, net profit
$10,000 less net operating loss
$2,000, IRC Sections 702,703
and 706), and nothing from
these figures for 19 59. Since
Section 706 (b) was inserted in
the 19 54 Code as a new provision, a partnership may not
change to, or adopt, a taxable


District Judge C. K. Quincalled one of the all-time political giants of Bexar countyis dead.
The 83-year-o~d jurist succumbed from the after-effects
of surgery.
His full name was Charles
Kennon Quin and he was born
in Tangipahoa, La., in 1877 and
moved to Weimar the same year.
After an education in the Colorado county schoo's and graduation from Weimar institute, he
taught school for several years.
With his first pay check, he
bought a set of Blackstone's
"Commentaries," and started a
study of law that lasted several
years. In the meantime he
taught during school sessions
and worked as a railroad wiper
in the Glidden roundhouse when
school was out.
Quin later was named head
of the Columbus High School
and then Colorado County
school superintendent. In 1909
he passed the b,ar examination.
Many of the most famous
and most important eases tried
in Bexar county during the next
18 years went before Quin's
He ran largely without opposition f o r district judge
through the years and remained
vigorous and active until the
end of his career.
His first flutter at politics
came in 1921 when Gov. Pat
Neff named him to fill a vacancy as district judge of the
four-county 25th district. Two
years later he ran for the post
and was defeated.
Quin came to San Antonio
in 1923, entered practice and
year other than that of all its
eventually was named assistant
principal partners unless it escity attorney for trial cases.
tablishes to the satisfaction of the
Later he was made city utilities
Secretary or his delegate a busiattorney, where he started the
ness purpose therefor. Even if
studies that led to the purchase
permission grants, or an old
of the San Antonio Public Serpartnership has, a taxable year
vice Company-a feat which
other than that of its partners,
Quin always regarded as the
they realize the total amount of
high point of his career.
the partnership income in one
After a long and colorful
year. The shareholders of a tax
career as mayor, in which he
option corporation, on the other
reached the heights of power
hand, may make distributions
and then, defeat, Quin entered
and be tax on them at their tax
the race for a vacancy on the
convenience by virtue of the sec57th District Court caused by
tions previously discussed. The
the death in 194 2 of Judge
Commissioner of Internal Revenue has sought to curb this flexi- Everett Johnson.
Despite the determined opbility through regulations under
position of state and local poli5ection 442 IRC. but since this
ticians, Quin staged a write-in
section relates solely to changes
campaign and won handily. He
in accounting periods, any new
corporation should be able to then settled down to a truly
distinguished career as a judge.
adopt any fiscal year desired.
(Continued on page 7)


(Continued from page 1)
was assisted in by students of the
law school.
The speakers of the Institute
and their subjects were as follows:
Raphael Sherfy - Attorney
Turney & Turney, Washington
D. C.; A.B., M.A., LL.M.,
George Washington University;
LL.M., Harvard Law School. The
topic was "Investments and
Operations Abroad - Tax Aspects." Frederic A. NicholsonAttorney, Debevoise, Plimpton
& McLean, New York, New
York; LL.B., University of Virginia. The topic was "Tax Option Corporations and Tax Planning."

"About this Tomkins case, call him up and try to settle for

a small amount. I don't tbild< he will take it to court."

AtStanley Schoenbaum torney, Law Offices of Jol:m
Peace, San Antonio, Texas;
LL.B., University of Virgi~ia;


LL.M., (Taxation), New York
University; Adjunct Professor
of Law in Federal Taxation, St.
Mary's University School of
Law. The topic was "Important
Recent Tax Developments Affecting Estate Planning."
VesterT . Hughes, Jr.- Attorney, Jackson, Walker, Winstead, Cantwell & Miller, Dallas,
Texas. The topic was "The
Charitable Foundation in Estate
Planning -.Practical and Tax
Thad Barrington, Jr. - Assistant Vice President and Trust
Officer, Mercantile National
Bank, Dallas, Texas (substituted
for Mr. Arthur Drebing who
became ill) . The topic was "Selected Problems in the Planning
and Administration of Trusts
and Estates from the Trust Officers' Viewpoint."
Eugene F. Scholes- Professor
of Law, University of Illinois,
A.B., J.D., State University of
Iowa; LL.M., Harvard Law
School; J.S.D., Columbia University. The topic was "The
Use of Powers of Appointments
in Estate Planning."
Gene Emery Attorney,
Knight, Wright & Simmons,
Dallas, Texas; LL.B., cum laude,
Harvard University. The topic
was "Planning for the Marital
Deduction with Emphasis on
Community Property."
James D. Landauer - President, James D. Landauer Associates, Inc., New York, New
York; attended Harvard Law
School; Immediate Past President, American Society of Real
Estate Counselors. The topic was
"Investments in Real Estate."
J . Franklin Ray, Jr. - Manager, Investment Supervisory Department, Bache & Co., New
York, New York; Member of
Bache & Co. Investment Policy
Committee. The topic was "Investment in Securities." Mr. Ray
also spoke on "Investments in
Securities Selected Tax Aspects."
Herbert C. Graebner-C.L.U.;
B.S., Valparaiso (Indiana) University; M.B.A., Northwestern
Dean, American
College of Life Underwriters.
The topic was "Investments in
Life Insurance and Anhuities."
Harry Graham Balter - Attorney, Los Angeles, California;
J.D., School of Jurisprudence,
University of California; Department Editor, .Journal of
Taxation. The topic was "Investments in Real Estate-Selected Tax Aspects."
Jesse H. Oppenheimer-Attorney, Lang, Byrd, Cross, Ladon & Oppenheimer, San Antonio, Texas; LL.B., Harvard
Law School; Graduate Legal
Studies, Harvard Law School;
former lecturer in Taxation, St.
Mary's University School of
Law. The topic was "Tax Aspects of Ownership and Transfers of Life Insurance."
William ]. Bowe Professor of Law, University of Colorado, B.A., Fordham University;
LL.B., Harvard Law School. The
topic was "Buy and Sell Agreements."
Moderators for the Institute
were Walter R. Flack, C.P.A.;
Francis W. Baker, Attorney;
Frank J. Greene, Professor of
Law, St. Mary's University
School of Law; and J. Chrys
Dougherty, Attorney.

Page Five


RALPH A. APFFEL, 2012 Ave. L,
Galveston, 29 years of age, married,
veteran, has worked as low school
assistant librarian, clerk, whorehouseman, operator in chemical plant,
member of Phi Delta Phi, President
of Barristers' Club . He plans a general private practice with admiralty

T£0DORE AREVALO, 3108 Salinas, 27
years of age, married, veteran, has
worked as taw clerk, mechanic, mem~
ber of Phi Delta Phi, would like to
practice civil low with corporation,
or private proctic!f.

ROBERT GUY DAVIS, Age 23, Married,
children, has worked as low clerk,
prefers civil trial work and corporation low. Would like to practice in
Dol1o5 and be ossoc:ioted with a small

EDWARD V. DYLLA, 522 W. Gerald,
23 years of age, single, non-veteran,
has worked os salesman, insurance investigator, low clerk; Editor of Barrister News, Pres. of Delta Theta
Phi, Debater, member of Pi Kappa
Delta, honorary speech fraternity and
Delta Theta Phi, member "Who's
Who in American Colleges and Universities", plans to practice with a
S'!'IDII firm or private practice. Interested in politics.

DONALD J. HAND, 226 Galway Drive,
-28 years of age, married, 2 children,
veteran, gr-aduate of Texas University,
has worked at several drilling componies, insurance company, prefers
practice in Iorge town in trial work.

TUCK R. CHAPIN, 322 Sandalwood,
31 years old, married, veteran, works
at City Health Dept., member of
Phi Delta Phi, plans general practice.

BUDDY R. CHASTAIN, Box 1634, married, 28 years of age, veteran, has
worked as low clerk, .member of
Delto Theta Phi, plans private practice in family firm .

AUGUST J. COOK, 218 Glentower,
married, children, veteran, C.P.A.
pions to practice as a C.P.A. in the
tax deportment of some C.P.A. firm
or tax deportment of o low firm .

SAMUEL L. EGGER, 134 Green Me!.ldow Blvd., married 2 children, 44
years of age, veteran, has worked
os registered professional electrical
engineer, Magister and historian of
Phi Delta Phi, no definite plans.

26 years of age, married, 2 children,
non -veteran, worked as school teacher,
Historian and Magister of Phi Delta
Phi, Barrister Club treasurer, Would
like to be associated with District
Attorneys office or private practice.

JOHN M. FLATTEN JR., 102 College
St., 24 years of age, single, experience as administrative clerk, fire
and police dispatcher, printer, auto~
mobile dealer. Held office .gs Barrister Club Treasurer, Managing Editor
of "Barrister News", member of
Delta Theta Phi. Desires position in
firm active in international low.

ROBERT E. HOBLIT, 218 Dorothy
Louise Dr. single, 26 'years of age,
non-veteran, worked as Juvenile Probation Officer, Personnel Technician,
membe"r of Psy Chi, Phi Delta Phi,
Toastmasters, prefers private practice.

MARVIN G. KELFER, 8503 Wakefield,
married 30 years of age:, veteran,
works with private enterprases, member of Phi Delta Phi, plans to continue personal business activities.

MARIO OBLEDO, 823 W. French
Place, 28 years of age, married, 1
child, veteran, Registered Pharmacist,
member of Delta Theta' Phi, American
Pharmaceutical Assn ., Texas
Pharmaceutic-al assn., Phi Delta Phi,
San Antonio Retail Druggists. No
definite plans as to practice.

THOMAS J. LEE, 1607 Ashby, 36
years of age, married, 3 children,
veteran, has worked os aeronautical
eng1neer, accounting, appliance and
furniture business. Member of Optimist Club, Kappa Pi Sigma. Plans
partnership with on attorney in
corporation and tax practice.

ELIZABETH D. REEDER, 451 Pinewood Lone, 36 years of age married,
four children, plans private practice.

B. l. LANGE HOFFMAN, 247 Edge·
wood Pl. single, 26 years of age, nonveteran, has worked in Legal Aid,
low clerk, member of Phi Delta
Phi, President of St. Thomas More
Club, A.L.S.A. Delegate, Plans graduate work in Corporation low and
Corporation practice.




BILLY F. RICHARDS, 102-c Paradise
Lone, 33 years of age, veteran, single, reporter, Son Antonio Light; Historian of Barristers,. Club member of
Phi Delta Phi, plans to join private

STAN LEY S. STUDER, 555 W. Mariposa, married, 28 years of age, veteran, self employed in real estate,
member of Delta Theta Phi, Shrine,
plans to enter private practice. Prefers property law.

AUTHUR GRAY SMITH, 718 Marguette, married, 2 children, veteran,
has worked as Stoff Insurance Adjuster for Diversified Company, member of Phi Delta Phi, prefers civil
practice. Desires experience in City
AttorneyS office.

CHARLES . TEAL, 2337 Glen Ivy Drive,
Married, Three children, 28 years of
age, veteran. Has worked in o low
office for four years. B.B.A. degree,
member of Delta Theta Phi low
fraternity. Desires to enter the general
practice of low.

JAMES W. LEWIS, 218 Dorothy Lou:se
Dr. single, 29 years of age, veteran,
has worked In civil service and as
low clerk, member of Phi Delta Phi,
plans private practice.

FRANK R. SOUTHERS, 804 Lovero,
22 yli!'ars of oge, married, 1 child,
non .. veteran, has worked as bookkeeping clerk, PAX switchboard operator,
fire and police dispatcher, member of
Phi Delta Phi. Historian of Barristers'
Club, staffwriter of Barrister News,
Meet Court Competiter, -plans graduate work or private practice.

RICHARD M. ZIRKLE, 1303 Poseo de
Vaco, Son Angelo, married, four
children, 41 ears of age, veteran,
works as veterinarian, member of
Phi Delta Phi. No plans as yet for
low practice.

of age, married, children; veteran;
lias worked as Research £naineer,
soles executive, real estate· broker,
test pilot; member of Phi Delta Phi,
plans personal business octivitiQ.

leaf, Apt. 4, married, 23 yeors of

Pr:~. n:~-~~tr~r~tl;;ow~k~n,



ington, New Brounfel5, 27 yeors of
age, married, 1 child, veteran, has
worked as krw der , $0\esmon, \0"\1ns
adjusting; member of Knights of
Columbus, Delta Theta Phi, desires
po5ition with city, county or District

OLLIE K. MAYO, 214 Donaldson ave.
single, 28 yean of age~ veteran,
worked as filing clerk, dental lob
technician, athletic instructor. Mem·
ber of Delt-a Theta Phi, Knights of
Columbus, Reserve Officers Assn.,
Sigma Beta Chi. Plans private practice with medium size firm.


berry, married, 24 years of age,
non-veteran, member of Delta Theta
Phi, Barristers' Club Historian, plans
to enter small firm in San Antonio,
or in Panhandle or Southplains area.

Page Six



Professor Orville Walker (left) rece1v1ng
a plaque of appreciation from the
graduates of 1960 from Robert B. Davis.
The plaque reads "Love and devotion







The very Reverend Wolter Buehler presents
to Dean Ernest A. Robo (right) on
appreciation award .while Student Bar
President, Emmett Cater (center) looks
on .




First Graduating Closs of St. Mary's University School of Low, 1935-George Bootwright, Dallas, Francis Sullivan and Bruce Waitz, San Antonio, Texas; not shown are
James 0 . Herrington, San Antonio, William Tupper, San Angelo, and Arthur Jordan,
who is deceased.

Henry B. Dielmon,
present Dean.


first Dean of St. Mary's University with


Ernest A. Robo,

Original Faculty of the Son Antonio Bor Association School of Low, Predecessor of St.
Mary's University School of Low. Lucian L. Morrison, Joh Wheeler, Leo Brewer, Henry
B. Dielmonn, Arley V. Knight, John K. Weber, W. F. Nowlin, Harold K. Stanard, all
of Son Antonio, Texas. Mr. C. 0 . Wolfe, Son Francisco, is not shown in the photo.

J . F. Whitehurst, member of the St. Mary's University low School Boord ·of Trustees receiving the St. . Thomas More Award
from Rupert M. Gresham.

Henry B. Dielmann (right) first Dean of the St. Mary's University Low School
receiving an appreciation award from Father Walter Buehler, President of St.
Mary's University.

The Third· Annual Rosewood Gavel Award was presented to Judge Joseph C. Hutcheson
Jr., (left) retired Chief Judge of the 5th Circuit Court of Appeals (Federal)
by Supreme Court of Texas Justice Norvell.

First Freshman Closs (graduated 1937) of the School of Low in September 1934-Col. George Keene, Retired, Judge AI Boos,
Dean Ernest A. Roba, Judge Archie S. Brown, and Joseph T. Kenny.


Page Seven


"The School of Low has outgrown the local concept and must now think on a
regional basis," said Dean Ernest A. Robo during his principal address at the Silver
Jubilee Banquet.

Luther Rutherford, ( leltl received the
Domangue Award lor the best paper
written in the field of Torts or Workmen's Compensation. The Award was
by its donor, Authur A.

Aloysius A. Leopold receovong Outstanding Freshman Award from Robert Burke
(left l,
"Dean's List" .


By Tom Joseph
Two delegates f rom St.
Mary's School of Law, Tom Joseph and Pete Plumb, attended
the 5th Circuit Conference of
the American Law Student Association held in Atlanta, Georgia, on April 14.
During the conference the
St. Mary's delegates attended
several workshops which included discussions of A.L.S.A. activities, student bar projects, and
student publications.
A panel discussion was also
held during the conference at
which the topics of Federal
practice and labor law wer.e discussed. The conference was honored by the presence of many
prominent members of the
bench and bar from the Atlanta area.
One of the St. Mary's delegates holds the chairmanship of
one of the two A.L.S.A. committees in the 5th Circuiit,
which is comprised of Florida,
Georgia, Mississippi, Abbama,
Louisiana and Texas. His report
was accepted in full.
There were three resolutions
introduced. The delegation from
St. Mary's Law School introduced one and it was passed
after some discussion, by unanimous vote and without
Also during the convention,
an election for the 5th Circuit
Vice-President was held and one
of the members of the St.
Mary's delegation made the
nomination speech .f or Paul
Armitage of Mercer University
of Georgia.
Armitage was elected by ac~.,_




representatives received a letter
of appreciation for their efforts.
According to Joseph and
(Continued on page 8)

"Natural L·ow" was the subject of the
address by The Very Reverend Aloys J.
Blume Post President of St. Mary's University and now President of Chominode
College in St. Louis.
Fronk Y. Hill, Jr., (Right) receovong the Leslie C.
Dton of Delta Theta Phi, Edward V. Dyllo.







The building proper is now unchanged except that the smoU building in the


has been removed and the River Garage erected 1n the porkmg area shown on th1s


No festivity honoring the school, no
occasion honoring post professors or
post graduates should pass by without
the mention of the late Leslie C. Merrem .
The "Judge" as he was affectionately
called was the bulwark of St. Mary's
University during the war years and the
inspiration and idol of students, graduates
and colleagues alike during his waning
years. A truly dedicated man, he gave
his entire sell for the promotion of
higher scholastic and professional standing for students and the school.

TAXSuppose, now, for the following year-that is, the taxable
year ending February 28, 1961there are no changes in the law,
and the corporation has a net
operating loss of $7,000. Also
assume that it pays no salaries,
but distributes $4,5 00 in cash
to each of the two shareholders
on June 30, 1960, and that on
August 31, 1960, one shareholder gives half his stock to
his son.
The corporation will again file
information return 1120-S. In
schedule K-Shareholder's Share
of Income--it will show the
amount of the net operating loss
borne by each person who was
a shareholder during the year,
the dividends and the nondividand distributions going to. each.
Section 1374 IRC allows the
net operating loss for the current year to be deducted by each
shareholder on his own return.
It is a deduction from gross income in arriving at adjusted
gross income for the taxable year
of the shareholder in which or
with which the taxable year of
the corporation ends. See Section
1.1374-1 (b) of the Regulations.
The net operating loss is prorated among the shareholders on
the basis of the stock ratio of
each shareholder and the number
of days such ratio persists. In
the example, the daily loss would
be $19.13 (that is $7,000-:-3 6{:
However, there is a limit on
the amount of the net opera,ting
loss that may be deducted. Section 1376(c) (2) IRC says that
the shareholder's portion of the
net operating loss shall not exceed the sum of the adjusted
baSiS of his stock and indebtedness owed to him by the corporation.
There is po indebtedness in
the example, so only the basis
of the stock must be considered.
Remembering that each shareholder had a basis of $1,000 for
his stock (the purchase price
or cost is the basis under section
1012 IRC), the adjusted basis
must then be determined by reference to section 1376 IRC.
This section requires the basis to
be increased by adding thereto
the amount of the corporat:on's
undistributed taxable income. included in. the shareholder's gross
income. The undistributed taxable income for the year ending
February 29, 1960, was $5,000
and each shareholder included
$2,500 in his gross income for
1960, so each then has an adjusted basis of $3,5 00 for hi~
stock. Any loss in excess of
$3,5 00 is ignored, and the basis
of the stock will be zero (IRC
Section 1 37 6) . This is similar
to the treatment of a partner's
capital account for profits retained in the partnership and
losses borne by him under accounting theory. It is similar.
also, to the income tax treatment of partnerships, ex.cept as
modified by Section 704 (b) I~C
which allows a partner to deduct losses in excess of his basis
at the end of the partnership
year in which such excess is repaid to the partnership.
The last item to be taken up
is the distribution of $4,5 00 to
each of the two shareholders on
June 30, 1960. Schedule L-the
comparative balance sheets-on
Form 1120-S shows that shareholders' undistributed taxable
income s h o u 1d be segregated
from earned surplus and undivided profits accumulated. This is


a recognition that such amounts
are to be treated differently
when distributed to the shareholders. Section 1375 (d) IRC
provides that such distributions
are not considered to be a dividend (and are theFefore taxfree) ,
and ·also that they shall not reducri the earnings and profits.
Here, the first $2,500 is nontaxable to each recipient; whereas, the remaining $2,000 is taxable because paid out of the
$5,000 surplus arising before the
election to be a tax option corporation. Section 1.1375-4(a) of
the Regulations provides th.1t
each shareholder will then reduce
the basis of his stock by the
amount of the distribution out
of previously undistributed taxable income in accordance with
Section 301 (c) (2) IRC. If the
distributions exceed the basis ,
then. the excess is treated as gain
from the sale of property under
IRC Section 3 0 1 (c) ( 3 ) .
It might be noted in passing
that the Regulations state that
a distribution in property other
than money is never a distribution of previously taxed income
(Section 1.1375-4(b) . Thi~
means, of course, that a distribution of property will be taxed to
the recipient if there are corporate profits or earned surplus.

DELTA THETA PHI(Continued from page 3)
During the Spring semester's
Barrister Club election, as the
result of several equally capable
Delt's desire to run for the same
office, the fraternity broke tradition and adopted the policy of
not backing any particular candidate for election to office.
Despite this, Brothers of Delta
Thetoa s"Wepto tohree of the -four

contested offices. Congratulations are in order for Emmett
Cater, President; Mike Brown,
Vice-President; Royal Adams,
Parliamentarian; and S. Benton
Davies Jr., Sergeant at Arms.
This, together with Pete Plumb
as incumbant ALSA alternate,
brings to a· total of 5 of the 9
offices of the Barrister Club held
by brothers of Bickett Senate.
The Brothers of Bickett Senate also congratulate: Buddy
Chastain and Edward Vincent
Dylla, two of the three St.
Mary's Law School students,
who were selected for "Who's
Who among students in American Universities and Colleges;
Fred Galindo recipient of the .
Mary Hansen Santee $100.00
Scholarship, Pete Plumb and
Ray Wietzel who divided the
Farmers Group Insurance $300.00 Scholarship; and Frank Y.
Hill recipient ot the Leslie C.
11errern 1\vvard.

Edwin P. Horner has been
elected a trust officer of the
Frost National Bank, it was
announced today by T. C. Frost,
Horner, a Baylor University
law professor since 1948, has
specialized in oil and gas law,
water law, and trusts.
A native of Davis, Oklahoma,
and a graduate of the University of Oklahoma, Horner received his LL.B. degree from
S. M. U. in 1948 and has been
on the Baylor law faculty since
that time.
Horner, a veteran of World
War II, is Co-Editor, Texas
Cases, of the "Oil and Gas Reporter," a publication of the
Southwestern Legal Foundation.
(Co~tinued on page 8)

Page Eight




At the end of each semester, those students who have completed
two full semesters of law work, and whose cumulative average
places them in the upper ten per cent of the total student body,
are placed upon the Dean's Honor List, as students of academic
distinction, and their names are recorded as a matter of permanent
record. Only those students carrying a normal load or more
are eligible.

Day Division

79 .5

1. Leopold, Aloysius A.
2. Rutherford, Luther S.
3. Villarreal, Joe, Jr.
4. Crites, C. Raymond
5. Southers, Frank R .
6. Plumb, Peter N.
7. Bambace, Robert S.
8. Wietzel, Raymond A.

8 5. 5
8 5. 5

30. 5

Evening Division

Egger, Samuel L.
Zirkle, Richard M.
Leger, John H.
Miller, Marvin
Richards, Billy F.
Ball, Cecil D.
Clark, Fred Ray
Paul, Norman L.

With an imposing if not dismaying array of hoodlum paraphenalia as a display, Captain
Matheny of the San Antonio
Police Force spoke to the Barristers' Club on the problem
of juvenile delinquency.
Drawing from information
gathered over a. 13 -year-period
as head of the Juvenile Division, the Captain spoke in a
tone of sincerity and urgency
not often heard. In a voice

. 0 f\<cc~e '\


bitterness and supplication, the
Captain discussed the causative
factors of delinquency.
He said "the primary contributing factor toward making a juvenile a delinquent is
parental delinquency. This situation is usually crystalized into
one of two extremes; lack of
supervision or overprotection."
Captain Matheny emphasized
that without proper respect for
God and Law, which should be
instilled in the child's home life,
we may not look for any basic
improvements in the situation.
He st:lted that "the problem
exists because we, the public,
allow it to exist. A united populace, acting democratically,
has ample m eans of redress.
Pressure on the various strata
of representation would certainly bring an increment of needed
regulation of such things as
weapons and salacious literature."
Also cited as lacking was a
stringent judicial attitude toward those dealing in the above

112 College Street
San Antonio, Texas

ALSA NEWSPlumb, the issue of discrimination will be presented on the
floor of the House at the National Meeting in Washington,
D. C. in the form of a resolution.
The two representatives said,
"there is full agreement in this
delegation in its conviction that
discrimination is not to be condoned. But it remains an open
questio as to whether any resolutions passed will aid or antagonize the situation."
"Since the delegation should
be t:.~ ··vke O'f tiie sfudcn
body at St. Mary's School of
Law, we enthusiastically solicit
the opinions of this student
body," the delegates said.
During the conference, emphasis was placed upon the National Moot Court Competition
sponsored by the A.L.S.A. According to the delegates, "it is
believed that this competition
will provide an excellent opportunity for all students Interested."
As soon as details are
available, the matter will be
brought to the attention of the
student body, they said.

LAW DAYteaching group are Judge Merrem and Judge W. S. Anthony.
The reception was held to
honor the first graduating class,
the 19 3 5 class, and the first
freshman class, 19 34-3 5, who
graduated. Members of the first
graduating class were Bruce
Waitz, James 0. Herrington ,
Francis C. Sullivan, all of San
Antonio; George Boatwright.
Non-Profit Organization·
San Antonio, Texas
Permit No. 787

Charles David Evans, graduating senior at St. Mary's Law
Schqol, is the recipient of the
Legal Scholarship A ward given
by the Women's Auxiliary of
the San Antonio Bar Association.
Mrs. Charles Trueheart, chairman of the new projects committee, made the presentation
to Mr. Evans. Serving on the
committee with Mrs. Trueheart
were Mme.s. C. Stanley Banks,
co-chairman: Joe Frazier Brown,
James W. Copeland Jr., Harry
Drought, 0 . Shelley Evans, and
Leo C. Tynan Jr.
Mr. Evans is Magistrar of
the Phi Delta Phi Legal Fraternity, past Historian of the fraternity, and Treasurer of the
Barristers Club in 19 59. He is
married and has two children.
The unanimous choice of the
committee, Mr. Evans was
chosen from a group of law
students recommended by the
Dean of the Law Schools which
the students attend. One student is selected from each fully
accredited Law School in the
State of Texas. The candidate
must be deserving and rank in
the upper one-fourth of his class
and preferably be a resident of
Bexar Co.




four years later, until 1920, he
was Jackson county judge.
When he moved to San Antonio in 1920 it was with the
intention of retiring. Instead he
accepted appointment as a member of the state highway commission, and served until 192 3
when he was appointed to the
new:y created 94th District

Bexar county's first criminal
district court judge died m
He was Wilton Wade McCrory, 87, razor-tongued and
colorful whose salty comments
were widely quoted while he
was on the bench and after he
Judge McCrory was born in
Air Mount, Miss., and attended
the University of Mississippi
from 18 89 to 1891. He received
his bachelor of laws degree from
the University of Texas in 1897.
He was admitted to the Texas bar the same year and began
practice at Edna in Jackson
In 1900 he became Jackson
county attorney and held that
post for 12 years.
In 1902, he married Ethel
Gaither. They had two children .
a son, Hall, who died, and a
daughter, Marion Elizabeth, now
Mrs. Charles Murphy.
from 1913 -191 5 McCrory
was a member of the Texas
House of Representatives and


He remained on that bench
when it became, in 1934, the
county's first Criminal District
Court, and he continued as its
judge until his voluntary retirement Jan. 1, 1955.
On the day he retired, 15 0
attorneys gathered in his courtroom to honor him and his wife.
His gavel was presented to him
as a momento and his picture
was hung in his courtroom.
Survivors include his widow;
his daughter; a sister, Mrs. J.
F. Bean, Senatobia, Miss., a
grandson, T r a v i s McCrory
Moursound, San Antonio; a
granddaughter, Mrs. Ann McCrory Lee, San Antonio, and
five great-grandchildren.

For your

A complete


HORNER( Continued from page 7)
Horner will teach courses in
trusts, oil and gas law, and
marital property rights law, at
St. Mary's University La;
School, night division, starting
with the current summer sesswn.
Mr. and Mrs. Horner have
three children.
Dallas; William Tupper, San Angelo; and Arthur Jordan, deceased.
Members of the first freshman class who graduated were
Dean Raba, Judge Archie S.
Brown, Col. George Keene, and
Joseph T. Kenney, all of San
Antonio, Judge Alfred C. Baass.
of Victoria.

q un





~.·.·~·"''',W•'•'·"'-""'"-··i•· ~~;


""·""""'•''"""'»-'-v.•.--.,.,, .,_.. ,

·~ ::~: ::

·:· :.:::~: .~






Far the fines 1 c:u ls ine, s uperbly
prepared , y ou'll ol w o y s tmj oy the

end l ess vorie ty o f th e fa mou s
Gunter Smor ga s bo rd.

LU~~~~O~M. - 2:30P. M.

$1 7 J

5:45 P. M. · 9:00 P. M


Our policy of retaining the
attorney designated by the
Testator or Trustor is one of the
reasons why so many Texas
attorneys rely on the Trust Department of the ALAMO NATIONAL




St. Mary's University School of Law, “Barrister News, 1960 Spring, V. 8 No. 1,” St. Mary's Law Digital Repository, accessed October 20, 2018,

Document Viewer