355 F2d 551 Puckett v. Commissioner of Internal Revenue

355 F.2d 551

66-1 USTC P 9188

M. C. PUCKETT and Thelma Puckett, Gerald C. Puckett and Eva
Jane Puckett, Petitioners,

No. 21866.

United States Court of Appeals Fifth Circuit.

Jan. 18, 1966.

William Bernard Clinton, Donald G. Gay, Dallas, Tex., for petitioners.

Sheldon S. Cohen, Chief Counsel, Max G. Ansbacher, Atty., I.R.S., Washington, D.C., Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Melva M. Graney, Jerome I. Chapman, Donald W. Williamson, Jr., Attys., Dept. of Justice, Washington, D.C., for respondent.

Before JONES, Senior Judge,1 and GEWIN and BELL, Circuit Judges.


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The question presented in this case is whether the Tax Court erred in concluding that $12,000.00 which the taxpayers were paid in the year 1954 for certain underground water rights is taxable as ordinary income rather than as a capital gain. The memorandum findings of fact and opinion of the Tax Court are not officially reported but may be found in 23 CCH Tax Ct. Mem. 238 (1964); 33 P-H Tax Ct. Mem. 261 (1964).


The taxpayers urgently insist that the transaction constituted a 'Water Rights Grant' and the funds received were proceeds of a sale and should be treated as capital gain. The Tax Court held the $12,000.00 was not received upon the 'sale' of property and that taxpayers could not treat the gain as a long-term capital gain.


A careful examination of the record and the findings and opinion of the Tax Court convinces us that the correct conclusion was reached.


The judgment is affirmed.


Of the Court of Claims, sitting by designation