Volume 57 — Tax Court Reports

At the petitioner's request, a general insurance agency with which he had an account billed a client for insurance coverage which petitioner indicated to the agency that he had placed for the client. Held: that the amount of $ 32,000 is includable in petitioner's income for the taxable year 1965 since he received it without any consensual recognition of an obligation to repay it and had the free and unrestricted use of it for the entire year. 2.

Taxpayer, in 1965, made a gift of a 5-year rent-free lease of property to a charity. In 1966 and 1967, taxpayer took charitable deductions based on the annual fair rental value of the property. Held: Taxpayer made a single, completed gift in 1965 and was entitled to a charitable deduction in that year equal to the fair market value of the interest conveyed. Taxpayer's annualization of the charitable contribution deduction was not proper in this case.

A corporate taxpayer purchased a ship and charter for a stated consideration. Following the destruction of the ship, the taxpayer sold the charter. Held: the charter was property subject to an allowance for depreciation, and its sale produced capital gain under sec. 1231(a), I.R.C. 1954.

O'Brien bequeathed remainder interests to six charities upon the termination of a testamentary trust. Held: Given the wording of O'Brien's will, the trustee does not have authority to invade the trust corpus. The value of the charitable bequests is, therefore, deductible under sec. 2055(a), I.R.C. 1954.

1. Dean was the sole stockholder of Warrington, a corporation engaged in the business of developing residential subdivisions in the Pensacola-Fort Walton area of Florida. Held: the transfers of the sewer facilities from Warrington to Florida Utility did not constitute dividend distributions to Dean. 2.

Petitioner, a corporation with its principal office at the time the petition in this case was filed in Shawnee Mission, Kans., in July 1957, pursuant to a resolution providing for a reorganization and recapitalization, issued its debenture bonds of a face amount of $ 50 in exchange for its preferred stock of a par value of $ 50 and canceled the preferred stock received in the exchange.

Held: 1. Bituminous Casualty Corp. correctly included in unearned premiums, as defined in sec. 832(b)(4), I.R.C. 1954, its reserves for retrospective rate credits and premium discount… Held: Bituminous Casualty Corp. correctly included in unearned premiums, as defined in sec. 832(b)(4), I.R.C. 1954, its reserves for retrospective rate credits and premium discount as reflected in its Annual Statements in the form approved by the National Convention of Insurance Commissioners.

Juan R. Brittingham, petitioner Robert's brother, placed $ 241,000 in the petitioner's bank account with instructions that Robert was to use these funds to purchase bonds for his… Held: the attorney-client privilege is applicable to communications made to the client's attorney by the client's agent; the privilege may be claimed by the client through her attorney though she is not a party to the present action; the privilege covers only communications made in confidence.

Held, the notice of deficiency, timely received by petitioners, after having been mailed to an address furnished by petitioners' attorney, was mailed to petitioners' last-known address within the meaning of sec. 6212(b), I.R.C. 1954, and the timely petition herein conferred jurisdiction on this Court.

Held, petitioners are not entitled to annual gift tax exclusions for 1965 and 1966 under sec. 2503(b), I.R.C. 1954, because the trustee… Held: petitioners are not entitled to annual gift tax exclusions for 1965 and 1966 under sec. 2503(b), I.R.C. 1954, because the trustee of the trusts to which the inter vivos transfers were made had discretion to accumulate or distribute the income; the Court does not have jurisdiction to render an advisory opinion on the possible effect…

Petitioner owned oil-producing properties and nonproducing properties. Petitioner also owned 100 percent of the stock of Petroleum and 80 percent of the stock of Oil. Held: the amount realized by petitioner on the sale to Reading & Bates is to be measured by the value of the consideration received rather than the value of the properties transferred. Held, further, the amount of consideration received by petitioner on the sale to Reading & Bates determined.

Held: The petitioner realized gain in 1965 as a result of an advance payment made by New York City pursuant to a condemnation of certain property of the petitioner. The realization of this gain started the running of the period within which the property had to be replaced in order for the petitioner to qualify for nonrecognition under sec. 1033. The realty was not replaced within the period established by sec. 1033(a) (3) (B) (i), and the petitioner failed to obtain permission to replace the property within a longer period as prescribed by sec. 1033 (a)(3) (B) (ii). Consequently, the petitioner may not elect sec. 1033 nonrecognition treatment of its gain on the condemned property.

1. All the stock of V corporation was exchanged for stock of S corporation. At the time, V's sole asset was a lease on oil and gas underlying a portion of petitioners' land. The lease had been acquired upon the organization of V from petitioners through a revocable trust of which petitioners were settlors and beneficiaries. Prior to the organization of V, petitioners and S had unsuccessfully attempted to arrange an exchange of the minerals for a ranch. Petitioners had V corporation organized for the purpose of developing the mineral interests and to correct or alleviate certain title problems in the interests. When V was organized, petitioners had no knowledge of a possible exchange of V stock for S stock. Held, V was organized for a business purpose, and was not a step in an integrated transaction to exchange a mineral interest for stock; thus the exchange of V stock for S stock was nontaxable within the meaning of sec. 354(a)(1) since a sec. 368(a) (1) (B), I.R.C. 1954, reorganization had taken place. 2. During 1966, S corporation paid petitioners amounts with respect to roads, flowlines, and well and tank battery locations on petitioners' land. The amounts were paid under the terms of an oil and gas lease which remained in effect as long as oil and gas continued to be produced. Held, the amounts received were in the nature of rent and taxable as ordinary income. 3. Petitioners, in 1965, paid a $ 20,000 fee to the trustee of their revocable trust, and claimed the entire amount as a deduction. Held, fee allocated among legal fees and trustee expenses, deductible under sec. 212, I.R.C. 1954, and expenses incurred for the benefit of V corporation which are capital in nature and nondeductible. 4. In 1965, 1966, and 1967, petitioners received certain payments under a water rights agreement with Shell. The payments were not made out of production from the deposit conveyed. Held, petitioners did not retain an economic interest in the water in place, the agreement constituted a sale, and amounts received under the agreement are taxable as capital gain.

Decedent purchased U.S. savings bonds (series E) with her own funds. Held: The Treasury regulations making U.S. savings bonds non-transferable apply to transactions between registered coowners and, therefore, a valid inter vivos gift cannot be made by actual or constructive delivery of the bonds from one coowner to the other unless they are surrendered and reissued in the name of the donee pursuant to such…

Petitioners sold an apple orchard electing to report the gain on the installment method. The contract provided for payment of interest which aggregated $ 6,000 per year during petitioners' lives; principal payable on their death. Contemporaneous with the sale, petitioners conveyed the installment sales contract to an irrevocable trust retaining the right to receive an annual payment of $ 6,000; the corpus payable on their death to a charitable foundation. Held, (1) the transfer of the installment obligation to the trust was a disposition of the principal interest within the meaning of sec. 453(d), I.R.C. 1954; (2) the charitable foundation was not publicly supported within the purview of sec. 170(b)(1)(A), therefore the contributions deduction was limited to 20 percent of petitioners' adjusted gross income and they could not carry over the excess contribution; (3) the annual $ 6,000 payment was not an annuity, but rather the payment of interest.

Decedent received interest-bearing notes for the major portion of substantial advances made to an electing small business corporation of which he was a shareholder. Held: even if such advances are considered contributions to capital, rather than bona fide indebtedness, such advances and notes do not constitute a second class of stock under sec. 1371(a) (4), I.R.C. 1954.

1. Petitioner was chartered as a bank under the laws of the State of Indiana and subject to supervision by a State agency. Petitioner made a small number of loans. Held: petitioner was a bank under the definition provided in sec.581 and is consequently exempt from the personal holding company tax by virtue of sec.542(c)(2). 2. Held, reasonable compensation determined for services performed by two shareholder-employees.

The petitioners' controlled corporation issued $ 55,000 of purported sec. 1244 stock for cash. Held: that the petitioners are not entitled to an ordinary-loss deduction on the exchange of purported sec. 1244 stock which did not qualify as such when issued to a partnership in consideration for an already existing equity interest held by the partnership. 2.

Held, on consideration of the documents themselves and all the facts surrounding the transactions, that the series of three documents executed by petitioner and Osaka Transformer Co., Ltd., an unrelated corporation with its principal place of business at Osaka, Japan, in 1965 and 1966, did not constitute a sale or exchange to Osaka of "all substantial rights" to the know-how which petitioner owned at the time or subsequently developed, and the amounts paid to petitioner by Osaka in those years are accordingly not entitled to preferential treatment as capital gain.

Held, that amounts expended by petitioner, a member of an organization of war veterans, in traveling to the Philippines and attending commemoration ceremonies honoring… Held: that amounts expended by petitioner, a member of an organization of war veterans, in traveling to the Philippines and attending commemoration ceremonies honoring defenders of Bataan and Corregidor, are not deductible under sec. 170, I.R.C. 1954, as contributions to such organization of war veterans.

Held: Where petitioners did not have the right to negotiate separately for the drilling of the wells in question, the amount specified by contract as the price… Held: Where petitioners did not have the right to negotiate separately for the drilling of the wells in question, the amount specified by contract as the price for the drilling of oil wells under turnkey contracts is not controlling with respect to the amount allowable as a deduction for intangible drilling expense.

Held, the conveyance to the City of Westminister, Calif., of an easement over a strip of land for use in widening the street adjoining petitioners' property was not a charitable contribution. Held: the conveyance to the City of Westminister, Calif., of an easement over a strip of land for use in widening the street adjoining petitioners' property was not a charitable contribution. Sec. 170, I.R.C. 1954.

Held: 1. Petitioners are not entitled to any net operating loss deduction in 1968 for a loss incurred in 1963 on the sale of the goodwill of an insurance agency and a loss in 1964 resulting from a… Held: Petitioners are not entitled to any net operating loss deduction in 1968 for a loss incurred in 1963 on the sale of the goodwill of an insurance agency and a loss in 1964 resulting from a mortgage foreclosure sale of their personal residence. 2.

Petitioner strip mined coal under a lease from ABC. Held: petitioner's ownership of the fee simple or surface rights in all of the lands covered by the lease from ABC did not give it the necessary economic interest in the coal in place that would entitle it to take the deduction for depletion provided in sec. 611(a).

In 1966 petitioner enrolled as a junior in the College of Engineering at the University of Detroit in Michigan. Held: during the taxable year when petitioner incurred the expenses in dispute, he was not engaged in the trade or business of being an engineer.

Petitioners, two married couples who enjoyed playing golf, made payments of $ 4,000 per couple to the People-to-People Sports Committee… Held: whether the payments petitioners made in conection with the golf tour are regarded as direct payments to the Sports Committee or as unreimbursed expenditures incident to the rendition of services to the Sports Committee, they are not charitable contributions within the meaning of sec. 170, I.R.C. 1954, and the regulations thereunder,…

Pursuant to a union agreement which provided for the establishment of a newly created pension plan by the petitioners' corporate employer,… Held: even if the purchase of assets by one corporate employer from the prior corporate employer may constitute a separation from the service of an employer by an employee within the meaning of sec. 402(a)(2), I.R.C. 1954, the distributions to petitioners were not made on account of such separation from the service, but rather were made…

Decedent's will established a marital and a residuary trust. Held: since the stated purpose of the trust was to qualify for the marital deduction, the words conclusive discretion do not authorize the withholding of income payments by the trustees. The trust qualifies for the marital deduction under sec. 2056, I.R.C. 1954.

Petitioner received alimony payments from her former husband under a 1965 decree that did not fix specific payments for child support. Held: petitioner cannot exclude any part of the payments as being child support under sec. 71(b). Held, further, petitioner can exclude from income an amount equal to one-half of the payments that the alimony order required that she make with respect to the property that she owned as tenant in common with her former husband.

Petitioner is the successor corporation to ATI, Inc. In 1965, the majority stockholder of ATI caused investigations to be made of two… Held: the receipt by ATI of its own stock from B and W, completely terminating their respective interests as shareholders and made in exchange for a release of its claims against them, constituted taxable income to ATI for its fiscal year ended Mar. 31, 1966; (2) the cancellation of ATI's obligations for accrued salaries, accrued interest,…

Petitioner entered into a contract with Stanford, whereby petitioner obtained the exclusive right to purchase the products manufactured by Stanford at 80 percent of list price. Held: neither a covenant not to compete nor a premium paid for the intangible asset has been demonstrated, and therefore petitioner is not entitled to an amortization deduction.

Held, In accordance with the terms of an agreement of sale in respect of certain real property, $ 100,000 paid to the seller at the time of the execution of the agreement and labeled prepaid interest… Held: In accordance with the terms of an agreement of sale in respect of certain real property, $ 100,000 paid to the seller at the time of the execution of the agreement and labeled prepaid interest was in fact merely a downpayment and not bona fide deductible interest.

T received a lump-sum payment under an early retirement plan established in accordance with a collective-bargaining agreement between the ILWU and the PMA, an employers' association. Held: the early retirement plan is not a qualified pension plan under sec. 401, I.R.C. 1954, because it is not funded, and the lump-sum payment is taxable as ordinary income.

The petitioner had children by each of two prior marriages. In 1967, he paid $ 975 toward the support of his son by his first wife and $ 1,075 toward the support of his two sons by his second wife. Held: the petitioner is not entitled to the dependency deductions for his children under sec. 152(e)(2)(B), I.R.C. 1954, because that provision applies only when a noncustodial parent provides $ 1,200 or more for the support of a child or children with each custodial parent.

Promissory note for $ 1,500,000 not in registered form or with interest coupons at time of issuance or on Mar. 1, 1954, payable in monthly installments of $ 10,000 for 12 1/2 years, received with 40 percent of stock, in exchange for transfer of undivided one-half interest in patent rights to corporation, capitalized at $ 10,000, at time of incorporation on Oct. 1, 1953, held to be security within meaning of sec. 112(b)(5), I.R.C. 1939, and payments received in retirement…

Petitioners' daughter was hospitalized for 2 years with a mental disorder. Held: the automobile was not purchased primarily for medical reasons, and its purchase price is not a deductible medical expense; (2) her lodging was not primarily for medical care, and the rent paid therefor is not a deductible medical expense; and (3) the telephone was not used primarily for medical purposes, and the telephone charges…

H and W, owners of all the stock of M Corp., filed joint Federal income tax returns for 1965, 1966, and 1967. The Commissioner determined that certain expenditures and payments by M (including "Payments charged to loan account") constituted constructive dividends to H and W. H has conceded the deficiencies and W does not contest their correctness but seeks merely to be relieved of liability therefor under the "innocent spouse" provisions of sec. 6013(e), I.R.C. 1954. The record establishes affirmatively that W knew or had reason to know that there was at least some unreported income during each of the years. Also, the record is entirely silent as to the nature of the "loan account" payments as well as to the purpose for which they were used. Held, taking into account the fact that the burden of proof was upon W, she has failed to meet the requirements not only of sec. 6013(e)(1)(B) but also of sec. 6013(e)(1)(C).

During 1967 petitioner was employed as an instructor by the Biloxi Municipal Separate School District, which was undergoing a process of desegregation of its public schools. Held: the payments received by petitioner are taxable as compensation and are not excludable as a scholarship or a fellowship grant within the meaning of sec. 117, I.R.C. 1954; sec. 1.117-4(c), Income Tax Regs.

The United States Tax Court as established under the Tax Reform Act of 1969, secs. 941-962, is an article I or legislative court. The exercise by it of the jurisdiction conferred upon it by that Act, and prior law, does not violate article III of the Constitution of the United States.

When X died his estate consisted largely of stock of a family corporation. Held: the sons purchased the entire interest in the stock and not just a life estate therein. Therefore, as the stock was an intangible asset with an unlimited, or not reasonably ascertainable, useful life, petitioners are not entitled to deductions for the exhaustion of the interest that the sons purchased.

Pursuant to a property settlement, incident to a divorce decree, petitioner acquired a decreasing-term life insurance policy on his life to secure the payment of alimony, naming his wife… Held: on the facts presented, since the wife received no economic benefit from the policy, the premiums paid on the insurance policy are not deductible under sec. 215, I.R.C. 1954.

Held, payments received by petitioner Kathleen S. Phillips during 1968 while she was an intern in the Dietetic Internship Program sponsored by… Held: payments received by petitioner Kathleen S. Phillips during 1968 while she was an intern in the Dietetic Internship Program sponsored by Pennsylvania State University are excludable from income as a scholarship or fellowship grant under sec. 117, I.R.C. 1954; the primary purpose of the payment of such amounts was to further…

1. Held, the expense of petitioner's travel in the evening from his major post of employment to his residence, which was also his minor post of employment, was not incurred in the course of a trade… Held: the expense of petitioner's travel in the evening from his major post of employment to his residence, which was also his minor post of employment, was not incurred in the course of a trade or business and was not deductible under sec. 162. 2.

Taxpayer, an independent film producer, donated two films of his own production to certain qualified charities and claimed deductions under sec. 170, I.R.C. 1954. Held: the donation of each film constituted a contribution of property, and not of services. Held, further, the film productions had fair market values of $ 1,500 and $ 3,000, respectively.

During its fiscal year ended June 30, 1966, the petitioner produced combat and sateen trousers under 11 contracts with the Defense Supply Agency, using Government-furnished materials. The amount of excessive profits on such contracts in such year determined.

From 1944 to 1957, petitioner owned a piece of lakefront property. The property was sold at a loss in 1957. Held: petitioner cannot take a loss deduction under sec. 165, I.R.C. 1954, and thus is not entitled to a capital loss carryover for the years in issue.

1. Held (on reconsideration): Challenges to T.M.E.-Riss agreement under both sec. 482 and the assignment-of-income doctrine were made too late by respondent. Held: the loss realized by T.M.E. on the sale of property used solely by T.M.E.'s shareholder as a personal residence was not deductible under sec. 165(a). International Trading Co., 57 T.C. 455 (1971), followed.

Petitioner computed his Federal income tax for the year 1967 using the head-of-household rates. Held: the petitioner-father was not a head of a household within the meaning of sec. 1(b)(2), I.R.C. 1954, because his household was not his son's principal place of abode for the entire taxable year. The terms domicile and principal place of abode are not synonymous.

Petitioner in 1961 acquired from Guaranty all of Guaranty's Skyland division business under an assumption reinsurance agreement wherein petitioner agreed to assume all the liabilities under the… Held: The $ 1,650,000 must be taken into account in computing petitioner's gain or loss from operations (Phase II tax) in 1961 under sec. 809(c)(1), I.R.C. 1954, as consideration in respect of assuming liabilities under contracts not issued by the taxpayer. 2.

Decedent was required under a decree of divorce to pay $ 1,000 monthly to his former wife until she died or until the expiration of 10 years and 10 months. Held: for purposes of sec. 2053(a)(3) the value of the claim must be determined actuarially under sec. 20.2031-7(e), Estate Tax Regs., according to the terms of the obligation as of the date of decedent's death. Ithaca Trust Co. v. United States, 279 U.S. 151 (1929).

Petitioner was divorced from his wife by a German court in 1968. Under the decree the custody of two minor children of the marriage was granted to their mother, who continued to live in Germany. Held: the children were the dependents of petitioner during 1968 for purposes of sec. 152, I.R.C. 1954.

Held, that legal fees paid by petitioners in unsuccessful attempts to limit the condemnation of their commercial orchard property by a public utility… Held: that legal fees paid by petitioners in unsuccessful attempts to limit the condemnation of their commercial orchard property by a public utility district to the taking of a flowage easement rather than a fee simple interest are deductible as ordinary and necessary expenses of such business under sec. 162(a), I.R.C. 1954.

Held, in computing the adjustment under sec. 545(b)(5) on account of the excess of net long-term capital gains over short-term capital losses, any tax attributable to such capital gains must be taken… Held: in computing the adjustment under sec. 545(b)(5) on account of the excess of net long-term capital gains over short-term capital losses, any tax attributable to such capital gains must be taken into account regardless of when it may have accrued.

A partnership sold real estate in which it had an adjusted basis of $ 98,509.36 for a total price of $ 432,000 and incurred selling… Held: the amount of the mortgage assumption in excess of the basis must be included in the payments received in the year of sale, sec. 1.453-4(c), Income Tax Regs., and the selling expenses may not be added to the basis; therefore, petitioners, members of the partnership, do not meet the requirements of sec. 453, I.R.C. 1954, for reporting…

A lessee of property paid the lessor $ 125,000 for the modification of a lease upon the execution of which the lessee would continue to occupy the premises. Held: the petitioner is not entitled to capital gain treatment for the payment by the lessee.

Petitioner paid $ 780 for the support of his minor daughter in 1968. Held: petitioner is not entitled to a dependency deduction for his minor daughter in the year 1968.

A defective petition was timely filed in behalf of petitioners by their agent, who was not authorized to practice in the Tax Court. Held: the amended petition filed by petitioners relates back to the original petition and was timely filed. Motion to dismiss denied.

Three individuals decided to acquire property as an investment. They formed a corporation in 1961 and caused it to purchase the land. Held: the fact that the corporation's only activity was the sale of the land does not cause the proceeds therefrom to be ordinary income when said property was not held primarily for sale in the ordinary course of its trade or business, but rather was acquired as an investment; (2) the corporation properly elected to be taxed as a small…

Held, losses from the worthlessness of interest-free advances made by major stockholder and officer of a corporation to or on behalf of a customer of the corporation are deductible as nonbusiness bad… Held: losses from the worthlessness of interest-free advances made by major stockholder and officer of a corporation to or on behalf of a customer of the corporation are deductible as nonbusiness bad debts.

Petitioner, who was a senior medical student at the Medical College of Virginia for the first 6 months of 1969 and an intern at Wilford Hall, U.S. Air Force Medical Center, the last 6 months of 1969,… Held: petitioner may not exclude any portion of the payments from his gross income as a scholarship or fellowship grant under sec. 117 and the applicable regulations.

1. Held, of $ 142,234 paid to petitioner's president and principal shareholder in the taxable year 1966, by way of salary and commissions, $ 110,000 constituted reasonable compensation for services… Held: of $ 142,234 paid to petitioner's president and principal shareholder in the taxable year 1966, by way of salary and commissions, $ 110,000 constituted reasonable compensation for services rendered. 2.

The petitioner, an inventor, developed a high-speed printer for use in conjunction with electronic computers. Held: that the amounts received by petitioner from the National Cash Register Co. during the years in question related solely to the technological know-how rather than to any license under patents.

In 1967 and 1968 petitioner, a farmer, sold alfalfa leafcutter bee larvae in bee boards. Held: that (1) the raised bee larvae were held primarily for sale to customers in the ordinary course of petitioner's business and do not qualify as a capital asset entitled to preferential long-term capital gain treatment under sec. 1221, I.R.C. 1954; (2) the breeder bees do not qualify as livestock held for breeding purposes under sec.…

In 1967 petitioners established the F. G. Paxton Family Organization (a Trust). Held: the petitioners are to be treated as the owners of 86.38 percent of the trust under either sec. 676 or 677, I.R.C. 1954, and taxable on that percentage of its income ($ 6,413.05 in 1967) under sec. 671 because the trustees are nonadverse parties having no substantial beneficial interest in the trust which would be adversely affected…

The petitioner sold its convertible debentures for a price which equaled or exceeded their stated redemption values. Held: for purposes of computing deductible discount, such regulations are valid, and therefore, the claimed discount is not allowable.

In 1959 decedent gratuitously transferred her house, in which she had lived since 1922, to her children and their respective spouses. She continued to live in the house until her death in 1967. Held: On the facts of record, decedent and her donees had an implied agreement or understanding that decedent would retain possession and enjoyment of the house for a period which did not in fact end before her death.

Held, the fair market value of 425 sculptures at the date of death of decedent was $ 2,700,000. Held: the fair market value of 425 sculptures at the date of death of decedent was $ 2,700,000.

Held, the transfer of installment notes by petitioner, a dealer in furniture and appliances, to a finance company was a sale or other… Held: the transfer of installment notes by petitioner, a dealer in furniture and appliances, to a finance company was a sale or other disposition of such notes by petitioner within the meaning of sec. 453(d), I.R.C. 1954, and not a transfer of such notes as collateral security for amounts borrowed by petitioner from the finance company.

1. H, the cashier of a small town bank, misappropriated substantial amounts from the bank which he failed to report in the joint Federal income tax refunds he filed with his wife, W. Held, minimum… Held: minimum amounts of H's unreported income determined. 2. Held, further, W is relieved of her joint liability for the deficiencies in income tax under sec. 6013(e), I.R.C. 1954. 3.

Mabel F. Colton Park died Mar. 1, 1968. On the date of her death she owned a residence and a cottage. The will admitted to probate left both parcels of real estate to the decedent's four sons. Held: the property was not sold in order to pay expenses of administration, preserve the estate, or to effect distribution, but rather was disposed of solely to benefit the heirs, and therefore the expenses incurred in the sale are not deductible.

Commissioner of Internal Revenue attempted to mail notice of deficiency to petitioners' correct address outside the United States by certified mail 1 day before expiration of time for making timely… Held: Notice of deficiency not timely. Statute of limitations, pleaded by petitioners in petition, bars assessment and collection of tax.

Held, sudden and unexpected damage to a lawn, trees, and shrubs caused by the application of a weedkilling chemical product inadvertently recommended to petitioner by a retail… Held: sudden and unexpected damage to a lawn, trees, and shrubs caused by the application of a weedkilling chemical product inadvertently recommended to petitioner by a retail supplier was a casualty within the meaning of sec. 165(c)(3), I.R.C. 1954. Amount of deductible casualty loss determined.

On June 17, 1971, petitioner was sent a notice of income tax deficiency in the amount of $ 291.54 for the year 1969. Held: that the motion for removal of the case to the U.S. District Court must be denied. Held, further, that the petitioner is not entitled to a jury trial in the United States Tax Court.

The estate incurred expenses in selling stock in a secondary offering. Held: since the expenses of selling the stock were taken into consideration in computing the value of the gross estate, the petitioner may not also deduct them as expenses of administration under sec. 2053(a)(2), I.R.C. 1954.

Held, male petitioner, a full-time cantor of the Jewish faith, is a minister of the gospel under sec. 107 and entitled to the rental allowance exclusion provided in that section. Held: male petitioner, a full-time cantor of the Jewish faith, is a minister of the gospel under sec. 107 and entitled to the rental allowance exclusion provided in that section.

Petitioner's husband realized income in 1965 upon the incorporation of a partnership whose liabilities exceeded the adjusted basis of the transferred assets, but he did not report the gain in the… Held: petitioner is not relieved of joint and several liability for tax under sec. 6013(e), I.R.C. 1954, since her lack of knowledge of the omission was merely ignorance of the legal tax consequences of the incorporation, of which her husband was equally unaware.

On Aug. 13, 1971, a notice of deficiency was mailed to the petitioners at an address which was not their last known address. Held: the petitioners have the burden of pleading and proving that they did not receive the notice of deficiency before the expiration of the period of limitations for assessment, and since they have offered no evidence as to when the notice was received, they have failed to establish that the notice was untimely.

Petitioners, mutual savings banks, made loans secured by real estate. Held: mortgagors' escrow deposits made to petitioners were not deposits which secured petitioners' qualifying real property loans within the meaning of sec. 593(e)(1)(C) and therefore petitioners are not required to reduce their qualifying real property loans by the amount of mortgagor escrow deposits in computing the 3-percent addition to…

Held, the transfer of 51 shares of stock of Aeon Realty Co. by the decedent, Sumner Gerard, to his sons on Jan. 2, 1964, followed by his death on Mar. 10, 1966, constituted a gift made in… Held: the transfer of 51 shares of stock of Aeon Realty Co. by the decedent, Sumner Gerard, to his sons on Jan. 2, 1964, followed by his death on Mar. 10, 1966, constituted a gift made in contemplation of death within the meaning of sec. 2035, I.R.C. 1954.

After completing medical school and his internship petitioner entered into an agreement with the Department of Public Welfare of the State of Minnesota which provided him with educational allowances… Held: petitioner cannot exclude the allowances as a scholarship or fellowship under sec. 117. Held, further, petitioner cannot deduct tuition expenses as a trade or business expense under sec. 162 during the years in question.

Petitioner is a cooperative housing corporation for purposes of sec. 216, I.R.C. 1954. Held: petitioner has no depreciable interest in the building, etc., allocable to the perpetual proprietary leases, but petitioner may deduct the depreciation allocable to the one apartment leased to a nonstockholder; petitioner may also deduct depreciation for certain of its equipment used in connection with services it provides to the…

Herbert Enoch desired to purchase the Gloria Homes, an apartment complex consisting of 423 apartments. Held: that Enoch was at no time under a personal, unconditional obligation to purchase all 20 shares of R.R.R. stock and therefore the redemption of 19 shares of this stock by R.R.R. was not a constructive dividend to Enoch.

Decedent established a revocable inter vivos trust with the remainder, after intervening life estates, payable to a named charity. His will poured the residuary estate into the trust. Held: the existence of such discretionary powers did not preclude the deductibility of the charitable remainder under sec. 2055, I.R.C. 1954.

Pursuant to an antenuptial agreement in which the intended wife relinquished all her rights, either as wife or widow, in property then owned or thereafter acquired by the intended husband, the… Held: the value of the interest of the surviving wife in 50 percent of the residuary estate does not qualify for the marital deduction for estate tax purposes. Held, further, the value of the surviving wife's interest is not deductible as a claim against the estate.

Rocco and Carletta were shareholder-employees of small business corporations. Held: On the facts, the reallocations were improper. There was no correlation between the amounts determined by respondent to constitute reasonable compensation and the values of the services performed by Rocco and Carletta.

The decedent executed a promissory note under seal in the amount of $ 30,000 payable to her only son on or before the expiration of 10 years. Held: execution of the note and mortgage under seal does not establish that adequate and full consideration in money or money's worth, within the meaning of sec. 2503(c)(1)(A), I.R.C. 1954, was given for them.

At the time of her death, the wife of decedent was the owner of certain insurance policies on his life. The proceeds of the insurance were paid to the designated alternate beneficiaries, i.e., the children of decedent and the wife's nieces. Decedent, who died within 1 hour after his wife, was the sole residuary legatee and initially designated executor under her will. Held, decedent did not possess any of the incidents of ownership in the aforementioned policies within the meaning of sec. 2042, I.R.C. 1954.

The Tax Court is not deprived of jurisdiction where a petitioner files in bankruptcy subsequent to the filing of his petition for the redetermination of his taxes with the Tax Court. In such cases the jurisdiction of the Tax Court and the bankruptcy court to redetermine the deficiency is concurrent.

1. In 1965 petitioner completed the liquidation of a valid, unsecured debt owed to it by an insolvent sibling corporation, and claimed a bad debt deduction with respect thereto. Held: the identifiable events marking the worthlessness of the debt occurred in 1965. Held, further, respondent's argument based on the allegation that petitioner artificially ordered the affairs of itself and its debtor solely with the aim of achieving the optimum tax results must fail.

In 1961, a summons and complaint was filed by the Honolulu Redevelopment Agency, condemning property owned by the petitioners in Honolulu, Hawaii. Held: The petitioners have not shown what purpose the $ 26,000 payment was intended to serve, exactly how it was calculated, or why such amount should not be subject to taxation.

Held, living allowances paid by insurance companies to their actuarial employees attending the Northeastern University Graduate School of… Held: living allowances paid by insurance companies to their actuarial employees attending the Northeastern University Graduate School of Actuarial Science were paid primarily for the benefit of the insurance companies and do not constitute scholarships or fellowships excludable from gross income of the recipients under sec. 117(a)(1),…

Upon termination of various leases of certain of its property, petitioner received a cash payment of $ 47,500 in settlement of the tenant's obligation, under the controlling agreements, to restore… Held: such a cash payment is not excludable from gross income under sec. 109, I.R.C. 1954, and is taxable as capital gain to to the extent that it exceeds the basis of the leasehold improvements.

On Feb. 5, 1959, petitioners executed a partnership agreement wherein they formed a limited partnership known as A. K. Co. Contemporaneously, petitioners created six trusts; Adolph created three… Held: petitioners were the true owners of the limited partnership interest, and therefore the income attributable to such interest is taxable to them.