Volume 60 — Tax Court Reports

1. During the years in issue, petitioner was engaged in numerous lawsuits, most of which he initiated. Held: petitioner's expenses relating to such litigation are not deductible under either sec. 162(a) or sec. 212(1), I.R.C. 1954. 2. Held, further, petitioner has not established that he paid business expenses in excess of the amount allowed as a deduction for 1966 within the meaning of sec. 162(a), I.R.C. 1954. 3.

Petitioner, on the accrual method of accounting, deducted estimated total payments to surviving dependents under the State Workmen's Compensation Act in the year employees died. Held: that liability existed, but the amount of liability to the employees' widows was not reasonably ascertainable; held, further, that liability existed and the amount of the liability to the children of such employees could be reasonably ascertained.

Petitioners are dairy farmers who market their milk production in the Puget Sound area. Held: the petitioners are entitled to depreciation deductions under sec. 167, I.R.C. 1954, and applicable regulations, for the purchased class I milk base on a useful life for such base measured by the specific termination date of the enabling statute for the milk-marketing order under which the base was issued.

Held, expropriation of a portion of the taxpayer's property under a general town-planning ordinance as a condition for the rezoning of the remainder of the property into building sites did not… Held: expropriation of a portion of the taxpayer's property under a general town-planning ordinance as a condition for the rezoning of the remainder of the property into building sites did not constitute a real property tax within the meaning of sec. 164(a)(1).

1. In 1962 petitioner received notes in the total amount of $ 69,000 from McHenry in satisfaction of business and personal obligations, and in exchange for… Held: petitioner is not entitled to any capital loss on the disposition of his interest in Tomatoes. Held, further, the notes petitioner received from McHenry did not become worthless in 1965. 2. In 1966 petitioner filed a voluntary petition in bankruptcy and his assets were transferred to the trustee in bankruptcy.

H and W transferred stock to a trust, of which H was one of the trustees. Income derived from the stock was to be paid for 3 years to a charitable foundation and then to W for life. Held: no charitable deduction is allowed under sec. 170, I.R.C. 1954, because, considering all the surrounding circumstances, there is a strong likelihood that charity will not receive the beneficial enjoyment of its interest.

Petitioner and his wife, as Kansas domiciliaries, negotiated a property settlement in anticipation of their divorce providing, among other things, that petitioner would deliver to her sufficient… Held: petitioner realized capital gain income upon the transfer of stocks. United States v. Davis, 370 U.S. 65 (1962). George F. Collins, Jr., 46 T.C. 461 (1966), affd. 388 F. 2d 353 (C.A. 10, 1968), followed.

1. Rules of Practice of the United States Tax Court do not provide for requests for admissions, and respondent's failure to deny petitioner's requests for admissions does not establish the facts alleged therein as being deemed admitted for purposes of this case. Rule 36, Federal Rules of Civil Procedure, is not applicable in the Tax Court. 2.

Held: In determining the alternative tax under sec. 1201(a) on account of the gain from the cutting of timber by a taxpayer, who has elected… Held: In determining the alternative tax under sec. 1201(a) on account of the gain from the cutting of timber by a taxpayer, who has elected to consider such cutting as a sale or exchange pursuant to sec. 631(a), the resulting long-term capital gain is not reduced on account of the excess of expenses and deductions over other income,…

Held, petitioner sustained no loss on the sale of coal lands in 1966. Held: petitioner sustained no loss on the sale of coal lands in 1966.

P was a director and shareholder of MGM, and in 1962 he made a payment to MGM of $ 53,870.81 when the SEC indicated that P might be liable to MGM for such amount as an insider's profit within the… Held: under the particular circumstances of this case, the payment is an ordinary and necessary business expense of P.

P, a member of the faculty of U, was a principal investigator on two research projects supported by basic research grants by the National Science Foundation. Held: such payments received by P do not constitute a scholarship or fellowship grant excludable under sec. 117, I.R.C. 1954.

Petitioner was employed as a comptroller. Held: the real estate brokerage commission is not deductible under sec. 162 or 212. Held, further, the Pennsylvania real estate transfer tax is not deductible under sec. 164. Held, further, the fee paid the job-counseling organization is deductible under sec. 162.

The petitioner received stipends from the Southwestern Medical School during a period of training in the academic medicine field. Held: the stipends are excludable as scholarship or fellowship grants. Sec. 117(a), I.R.C. 1954.

Held, since the right to a widow's allowance under Massachusetts law is contingent as of the date of the decedent's death, a lump-sum allowance awarded to a widow some 18 months… Held: since the right to a widow's allowance under Massachusetts law is contingent as of the date of the decedent's death, a lump-sum allowance awarded to a widow some 18 months after the decedent's death is a terminable interest and cannot qualify for marital deduction under sec. 2056, I.R.C. 1954.

Held, that the petitioner, a cooperative organization, has no qualified investment in sec. 38 property for the fiscal year ended July 31,… Held: that the petitioner, a cooperative organization, has no qualified investment in sec. 38 property for the fiscal year ended July 31, 1968, and, therefore, has no unused investment credit for carryback and carryover purposes where it incurred a net operating loss and paid no patronage dividends or made other distributions during that…

Petitioner was retired from the Army on Sept. 30, 1967, on grounds of longevity and immediately began receiving retirement pay. Held: neither sec. 104(a)(4), I.R.C. 1954, nor sec. 105(d), I.R.C. 1954, permits petitioner, by reason of the Veterans Administration award, to exclude from gross income any part of his Army retirement pay for 1967 or 1969.

Under the terms of a 1955 separation agreement between petitioner and his wife, petitioner was to transfer appreciated stock in trust; the trust was to be irrevocable; income from the stock was to go… Held: petitioner is liable for the gift tax to the extent determined. Held, further, on the facts, petitioner is not liable for the addition to tax under sec. 6651(a), I.R.C. 1954. Held, further, petitioner, as trustee, is not estopped from claiming the step-up in basis.

A corporation engaged in custom-finishing livestock in feedlots is a farmer within the meaning of sec. 1.61-4(d), Income Tax Regs., and is entitled to file Federal income tax returns on the cash basis even though the corporate books are kept on the accrual basis. Sec. 1.471-6(a), Income Tax Regs.

A premium paid by petitioner to retire an issue of preferred stock in order to refinance on more favorable terms is not deductible as an ordinary and necessary business expense under sec. 162. John Wanamaker Philadelphia v. Commissioner, 139 F. 2d 644 (C.A. 3, 1943).

Petitioner and her former husband, at the time of their divorce on Oct. 13, 1967, converted the form of the joint ownership of their business assets from community property to tenancy in common. Held: the transmutation of the business assets from community property to tenancy in common was not a disposition for purposes of investment credit recapture under sec. 47.

Under sec. 6659(b), as amended in 1960, respondent may assess and collect the addition to tax provided in sec. 6651 (delinquency penalty), where no deficiency in tax is determined, without the issuance of a notice of deficiency. A petition filed in this Court to contest the applicability of the penalty only, where a notice of deficiency was not issued, must be dismissed for lack of jurisdiction.

Petitioners paid a fee for legal services in connection with the development and implementation of their estate plan. Held, 20 percent of such fee is allocable to tax advice. Held: 20 percent of such fee is allocable to tax advice.

Petitioner left his wife and children in Iowa in March 1960 and moved to Seattle, Wash. Petitioner's move was motivated by petitioner's personal, financial, and marital problems. Held: petitioner acquired domicile in the State of Washington in 1962. Held, further, petitioner and his wife manifested their intent no later than 1962 to renounce their marital community.

Held, the adequate and full consideration clause in sec. 2043 (a) of the 1954 Code comprehends only consideration received by a decedent in connection with property otherwise includable in his gross… Held: the adequate and full consideration clause in sec. 2043 (a) of the 1954 Code comprehends only consideration received by a decedent in connection with property otherwise includable in his gross estate under secs. 2035-2038 or 2041.

As part of an integrated plan, TRACK, which was organized and controlled by a group owning 10.23 percent of ACRA's stock, purchased 83.95 percent of ACRA's stock and then merged ACRA into itself. Held: Petitioner must recognize gain realized as a result of the exchange.

Petitioner, a renowned professional artist, is a United States citizen who resided in Switzerland during the years at issue. Held: The amounts received from the sale of petitioner's paintings constituted earned income as defined in sec. 911(b), I.R.C. 1954. Accordingly, the excluded amounts are exempt from taxation under sec. 911(a).

Petitioner, after filling an interim vacancy on the Supreme Court of Georgia, was successfully elected to a full term as an associate justice on the Supreme Court of Georgia. Held: the filing fee is not deductible as a State tax under sec. 164, nor is it otherwise deductible under sec. 162 or sec. 212, I.R.C. 1954.

Held: 1. The provisions of sec. 1.1372-4(b)(5)(iv), Income Tax Regs., that repayments of loans are not properly includable in gross receipts… Held: The provisions of sec. 1.1372-4(b)(5)(iv), Income Tax Regs., that repayments of loans are not properly includable in gross receipts of a corporation for the purpose of determining whether income from interest, rents, and royalties for the taxable year exceeds 20 percent of gross receipts for that year within the meaning of sec.…

Petitioner husband was a partner in a securities brokerage business which in the course of that business dealt in tax-exempt securities. Held: a portion of such borrowing was for the purpose proscribed by sec. 265 and a deduction therefor is accordingly disallowed. Leslie v. Commissioner, 413 F. 2d 636 (C.A. 2, 1969), reversing 50 T.C. 11 (1968), followed.

One of petitioners, a Michigan State trooper, received a cash subsistence allowance in accordance with Michigan law. Held: the subsistence allowance is not excludable from petitioners' income since petitioner was furnished cash, not meals, and was not furnished meals for the convenience of his employer.

Petitioners transferred as gifts shares of corporate stock to several donees on various dates and claimed blockage discount from the mean between the bid and asked prices from over-the-counter… Held: each gift must be valued separately and only the impact on the market of the number of shares of each gift shall be considered in applying the blockage discount. Maytag v. Commissioner, 187 F. 2d 962 (C.A. 10, 1951), not followed.

Held, payments by General Motors Corp. to petitioner, a General Motors Institute student, during his work periods in a cooperative… Held: payments by General Motors Corp. to petitioner, a General Motors Institute student, during his work periods in a cooperative study-work program are not excludable from petitioner's income under sec. 117(a), I.R.C. 1954, since these payments were made to enable petitioner to pursue his studies primarily for the benefit of the grantor.

Held, evidence obtained from the home of a deceased bookkeeper relating to the fraudulent omission by petitioner of sales and income from his… Held: evidence obtained from the home of a deceased bookkeeper relating to the fraudulent omission by petitioner of sales and income from his income tax returns was not obtained as the result of an illegal search and seizure within the meaning of the fourth amendment, and the use thereof by the respondent was not in violation of the…

Held, the fact that respondent did not comply with the requirement of the Administrative Procedures Act, 5 U.S.C. sec. 500, by sending… Held: the fact that respondent did not comply with the requirement of the Administrative Procedures Act, 5 U.S.C. sec. 500, by sending a copy of the notice of deficiency properly mailed to petitioners to petitioners' attorney, does not cause that notice to be invalid, nor does this failure alone without other evidence of improper action by…

Both petitioner and his wife separately earned income from sales. Held: Petitioner is not an innocent spouse. He was put on notice of the omissions by his wife's nondisclosure, and he failed to prove either that he did not significantly benefit from the omitted income or any other fact that would make it inequitable to hold him liable. Sec. 6013(e)(1)(B) and (C), I.R.C. 1954.

1. Petitioners George Gino, a driver education teacher, and Emilie Gino, a high school science teacher, are not entitled to deduct any part of… Held: the proper allocation ratio (2/8) is hours of business use to total hours of use. Rev. Rul. 62-180, 1962-2 C.B. 52, not followed. 3. Petitioners failed to substantiate, and therefore may not deduct, certain nonreimbursed educational and miscellaneous expenses claimed in excess of the amounts allowed in the notice of deficiency.

This case, originally decided in 55 T.C. 260, is before the Court on remand from the U.S. Court of Appeals for the Fifth Circuit (457 F. 2d 797) for… Held: Debts owing petitioners from Smith Petroleum which became worthless in 1965 were nonbusiness debts, deductible as such. 2. Debts owing petitioners from Smith Petroleum for advances made after Smith Petroleum ceased doing business at the end of 1965 which became worthless in 1966 were business debts, deductible as such.

Petitioner, an Italian citizen and resident, entered the United States in 1965 for 24 days to perform as an orchestra conductor for which… Held: Because the 1965 short taxable year was not reopened by the petitioner or by the Commissioner under sec. 6851(b), the Form 1040C constitutes an income tax return for purposes of the periods of limitations on assessment, and the period of limitation on assessment with respect to the taxable year 1965 expired before the Commissioner…

Decedent's husband died leaving his portion of community property to a testamentary trust. Held: participating agreement shares in open-end investment companies or mutual funds were properly valued for estate tax purposes at the liquidation value and not at the public offering price on the date of death, United States v. Cartwright, 411 U.S. 546 (1973), followed.

In 1967 petitioner paid $ 8,000 to settle a damage suit arising from an automobile accident which occurred in 1961. Held: petitioner is not entitled to a bad debt deduction in 1967 because he has not shown: (1) That the insurance policy covered the accident loss; (2) that, if it did, there existed a valid and enforceable obligation in 1967 for indemnification of his loss; or (3) that, if such an obligation existed, the debt became worthless in 1967.

Hansen Building, Inc., held 80 percent or more of the stock of Northwestern. Held: Hansen Building, Inc., owned at least 80 percent of Northwestern's stock and therefore Hansen Building, Inc., and Northwestern are component members of a parent-subsidiary controlled group as defined in sec. 1563(a)(1), thereby entitled to only one surtax exemption.

In late December 1968, petitioner sold its operating assets. Held: petitioner became a mere holding or investment company (see sec. 533(b), I.R.C. 1954). Further held, petitioner was formed or availed of for the purpose of avoiding income tax with respect to its shareholders and is therefore subject to the accumulated-earnings tax for such fiscal year.

Held: 1. Where the Commissioner did not concede the correctness of the company's accounting treatment of its self-constructed assets in abandoning… Held: Where the Commissioner did not concede the correctness of the company's accounting treatment of its self-constructed assets in abandoning capitalization adjustments in litigation involving the company for prior years, the doctrines of res judicata and collateral estoppel do not apply to the present litigation. 2.

Petitioner was a patron in a farming cooperative which was merged with another cooperative. Held: the participation certificates constituted an equity interest in the cooperative not a debt, and any loss realized is not deductible as a bad debt under sec. 166(a) (2).

Petitioners were U.S. shareholders of a controlled foreign corporation. Held: the invested funds, and the excess of the amount of the indebtedness at the end of the fiscal year over the amount thereof at the end of the prior fiscal year, represented an increase in earnings of the foreign corporation invested in U.S. property, which is not entitled to be excluded under the provisions of sec. 956(b)(2)(C),…

Petitioner is a corporation which assists citrus grove owners in marketing their fruit. Held: the inclusion in petitioner's income of the face amounts of the per-unit retain certificates does not violate petitioner's rights under the 16th, 5th, and 13th amendments to the Constitution. Held, further, petitioner was not merely a conduit and the income is not properly taxed to the citrus grove owners instead of petitioner.

P, a medical doctor, participated in a cardiorenal training program. All of P's activities were designed to train him in his individual capacity, and he performed no substantial services for the hospital or the laboratory. He had no responsibility for patient care, was never on call, and had no routine duties. Held, the stipend received by P during such training program was a fellowship grant under sec. 117, I.R.C. 1954.

Petitioner paid the education expenses of his former wife's niece and nephew. One-half of the expenses were credited to the wife pursuant to their separation agreement. Held: Petitioner's former wife received an economic benefit since the payments credited to her discharged her personal obligation to educate the children. Therefore the payments constitute alimony and are deductible by petitioner under the provisions of sec. 215.

Held, petitioner is subject to the tax imposed by sec. 1401(a) on his self-employment income from a partnership in 1969 even though this… Held: petitioner is subject to the tax imposed by sec. 1401(a) on his self-employment income from a partnership in 1969 even though this income, plus a small amount of wages he received in that year which were subject to tax under the Federal Insurance Contribution Act when added to the wages he received in 1969 subject to tax under the…

At the time of his death, certain debts of the decedent constituted bona fide obligations of his estate. Held: such claims are not deductible under sec. 2053(a)(3), I.R.C. 1954, in computing the net value of the estate.

Held: 1. Where property is exchanged for a secured contract to pay an annuity, the recoverable investment in the contract as defined in sec. 72(c), I.R.C. 1954, is the fair market value of the… Held: Where property is exchanged for a secured contract to pay an annuity, the recoverable investment in the contract as defined in sec. 72(c), I.R.C. 1954, is the fair market value of the property transferred. 2.

Petitioner in 1968 had a decrease in earnings and profits because part of the payments in redemption of shares of its stock held by charities was out of current year's earnings and part out of… Held: petitioner is not subject to the accumulated-earnings tax imposed by sec. 531, I.R.C. 1954, for the year 1968.

Petitioner borrowed funds in excess of its current business needs. Eight months later, when it still had cash in excess of such needs, it purchased tax-exempt bonds. Held: a portion of the interest paid by petitioner on such borrowed funds is nondeductible under sec. 265(2), I.R.C. 1954.

Petitioner was in the business of building and selling apartment buildings. Held: The property at 4619 Wakeley Street was acquired with the intent to demolish and therefore petitioner is not entitled to a loss deduction. The cost basis of the property is allocable solely to the land. Held, further: The gain recognized on the sale of 4620 Wakeley Street is taxable at ordinary-income rates.

Respondent's untimely motion for leave to file answer out of time is denied.

Held: 1. The alleged failure of the respondent to provide the petitioners a hearing before the Appellate Division did not render the notice of deficiency invalid. 2. Held: The alleged failure of the respondent to provide the petitioners a hearing before the Appellate Division did not render the notice of deficiency invalid. 2. The respondent has proved by competent evidence the date of the mailing of the notice of deficiency.

For several years prior to their fiscal year 1967, petitioners, members of a controlled group of corporations, had filed their income tax returns and computed their tax with the benefit of the… Held: the document filed by the affiliated corporations was a consolidated return, and under sec. 1562(c)(3), I.R.C. 1954, the filing of that return had the effect of terminating the controlled group's multiple surtax exemption election.

The deceased periodically borrowed money from a corporation which she owned with her family. After her death, the corporation failed to make a claim against her estate for the amounts then due. Ala. Held: The operation of the Alabama statute extinguished any liability the estate may have had to the corporation and released additional funds for the estate to distribute to beneficiaries.

A corporation entered into an agreement with its controlling stockholder for the acquisition of a patent covering a flooring system providing… Held: irrespective of any agreement between the parties, a reasonable royalty within the meaning of sec. 167(a), I.R.C. 1954, did not exceed 6 percent of the sales of the flooring system covered by the patent. Held, further: On the facts, the issuance of the notes by the corporation did not constitute payment of the accrued liability.

Petitioner, as a partner, took investment credits in 1965 and 1966 arising from the purchase of assets by the partnership. Held: petitioner did not retain a substantial interest in the corporation after October 1966, thereby denying investment credits in 1966 and triggering the recapture of investment credit provisions of sec. 47(a)(1), I.R.C. 1954.

Petitioner and her husband executed a joint and contractual will whereby the share of the community property of the first to die was to pass to a testamentary trust, and at his (or her) death, in… Held: petitioner did not make a taxable gift, at the death of her husband, of a remainder interest in her share of the community property under secs. 2501(a) and 2511(a), I.R.C. 1954.

P was president and controlling shareholder of a Wisconsin glove-manufacturing corporation, and he desired to establish a glove-manufacturing operation in the Philippines. Held: The Bahamian corporation was not a sham, and the income of the Philippine operation was its income; 2. Advances made from the Bahamian corporation to the Wisconsin corporation did not result in constructive dividends to P; 3.

Held, the house furnished petitioner Jack B. Lindeman, the general manager of a hotel, during 1968 and 1969 was located on the business premises of his employer within the meaning of sec. 119, I.R.C.… Held: the house furnished petitioner Jack B. Lindeman, the general manager of a hotel, during 1968 and 1969 was located on the business premises of his employer within the meaning of sec. 119, I.R.C. 1954.

Decedent bequeathed her residuary estate to a trust in which her stepfather had a vested remainder interest which was not defeated by his prior death. Held: that decedent's estate is not entitled to a charitable deduction under sec. 2055, I.R.C. 1954.

Petitioner's officers believed that a porous form of fluorocarbon plastic which petitioner had invented could be developed for use in the manufacture and sale of fuel-cell electrodes. Held: petitioner is entitled to deduct, under sec. 165(a), I.R.C. 1954, the losses which it incurred in financing the work of the new corporation.

In 1960, a fire occurred in petitioner's plant which caused an interruption of its business. Held: petitioner's business interruption loss recovery did not accrue within the meaning of sec. 1.451-1(a), Income Tax Regs., until 1961 when agreement was reached with the insurance carriers as to the amount of the recovery.

The petitioner, in computing its deduction for depreciation with respect to its railroad cars, adopted a class life in accordance with… Held: any such repairs that appreciably extended the useful life of a railroad car were capital expenditures not deductible under sec. 162, I.R.C. 1954, and the determination of whether such repairs did appreciably extend the useful life of a railroad car is made on an asset-by-asset basis even though the petitioner adopted such class life…

Petitioners, as members of an investment group, entered into an agreement with the shareholders of a Costa Rican corporation which owned and operated a sugar mill pursuant to which they promised to… Held: petitioners are not entitled to deduct the amount of the $ 105,000 as an ordinary loss under sec. 165(c)(2), I.R.C. 1954, since their loss was sustained as the result of the worthlessness of a security as defined in sec. 165(g), I.R.C. 1954.

Petitioner, a cash basis taxpayer, sold an apartment building in 1968 for a total price of $ 153,000, receiving a downpayment of $ 20,000 and the contractual right to receive $ 1,000 per month plus… Held: While the real estate contract was salable, it was not the equivalent of cash because petitioner could not presently receive for it an amount anywhere near its face value, i.e., stated contract price less an appropriate interest discount.

Under threat of condemnation, the State of California acquired petitioner's land, building, and certain machinery, which had a combined fair market value of $ 317,808. Held: a recital in the condemnation agreement that the $ 725,000 was paid for the physical assets acquired does not preclude the Commissioner from determining that a portion of the consideration was in fact ordinary income.

W commenced an action seeking a limited divorce and claiming support. H wanted an absolute divorce but lacked the grounds to secure one. Held: the payments to W were periodic payments in lieu of alimony or support under sec. 71(a), I.R.C. 1954. Held, further, legal expenses incurred by W in obtaining such payments are deductible under sec. 212(1), I.R.C. 1954.

Three tracts of land owned by petitioner, an accrual basis taxpayer, were condemned in the 1950's and the condemnor made deposits in the Federal District Court. Held: Petitioner is not entitled to the nonrecognition provisions of sec. 1033 on the condemnation awards, and further that respondent did not abuse his discretion in refusing to grant petitioner extensions of time to reinvest condemnation proceeds under sec. 1.1033(a)-2(c) (3), Income Tax Regs.; 2.

On Mar. 30, 1966, petitioner conveyed approximately 25,000 acres of lands to its shareholders as a nonliquidating distribution. Held: that the gains on the sales of the lands are not imputable to petitioner because it did not participate in the sales transactions in any significant manner. Jack E. Golsen, 54 T.C. 742 (1970), affd. 445 F.2d 985 (C.A. 10, 1971), certiorari denied 404 U.S. 940 (1971).

Respondent inadvertently misplaced an amended petition in an emergency file and later moved for leave to file his answer 5 months late. Held: that good and sufficient cause for the delay has been shown, and respondent's motion for leave to file his answer out of time will be granted. Estate of Helen Moore Quirk, 60 T.C. 520 (1973), distinguished.

In May of 1968, petitioner was divorced from his first spouse. Later that year he remarried. Held: That, accepting arguendo petitioner's contention that sec. 214 is unconstitutional on equal protection grounds and that the benefits accorded women under the statute must be extended to him, petitioner is entitled to no deduction under the statute for child care expenses incurred during that part of the year during which he was…

1. Held, a life insurance policy received by H in connection with the sale of all of the stock of several corporations controlled by H and W was part of the consideration for the sale of the stock,… Held: a life insurance policy received by H in connection with the sale of all of the stock of several corporations controlled by H and W was part of the consideration for the sale of the stock, and its cash surrender value represented long-term capital gain in the year received.

Petitioners contributed corporate stock to a duly qualified tax-exempt charitable organization in 1965, a series of cartoons to the Smithsonian Institution in… Held: the fair market value of each of the gifts is determined. Due to management problems within the accounting firm employed by petitioners, their income tax return for 1966 was not filed until June 20, 1968, approximately 9 months after the expiration of the last extension of time granted for filing the return.

P corporation and its wholly owned subsidiary, S, simultaneously adopted plans of liquidation and sold their assets to an unrelated third party. Held: that all requirements of sec. 337(a) and (b), I.R.C. 1954, having been complied with, the provisions of sec. 337(c)(2), excluding a sec. 332 liquidation from the benefit of sec. 337, are inapplicable and S is entitled to such benefit in respect of the sale of its assets.

Held: Petitioner, an employee of the Georgia Highway Department, is entitled to deduct expenses incurred in lobbying for employment benefits for all employees of the Georgia Highway Department under… Held: Petitioner, an employee of the Georgia Highway Department, is entitled to deduct expenses incurred in lobbying for employment benefits for all employees of the Georgia Highway Department under sec. 162(e), I.R.C. 1954, Amount of deductions determined.

1. The petitioner acquired the stock of certain corporations operating retail paint stores through a statutory merger with the parent corporation. Held: For purposes of the net operating loss carryover provisions of secs. 381 and 382, the statutory merger and subsequent liquidations must be considered together.

Held, in these circumstances, respondent cannot require the petitioner, a livestock raiser, who has consistently used the unit-livestock-price method of inventory valuation, to change from that… Held: in these circumstances, respondent cannot require the petitioner, a livestock raiser, who has consistently used the unit-livestock-price method of inventory valuation, to change from that method to the lower of cost or market method.

Through inadvertence respondent failed to file his answer on the due date. Held: that good and sufficient cause for the delay has been shown, and respondent's motion for leave to file his answer out of time will be granted.

Petitioner is a surviving bank by merger with another bank. In computing the limitation for its deductible addition to its reserve for bad debts under Rev. Rul. 64-334, for the taxable year 1964, petitioner must apply the combined bad debt ratios of both banks as of Dec. 31, 1963, even though the banks merged after that date because Rev. Rul. 64-334 must be construed in the light of Mim. 6209, Rev. Rul. 54-148, and Rev. Rul. 57-350.

Petitioner, an accountant, entered law school in 1966, and received his bachelor of laws degree in 1969. Held: such school expenses are nondeductible because they were incurred in the pursuit of a program of study which will lead him to qualifying in a new trade or business, sec. 1.162-5(b)(3), Income Tax Regs., namely the practice of law.

In 1967 the petitioner husband was a Government attorney. In connection with his business he found it helpful to maintain a small office in his apartment. Held: petitioner is entitled to deduct the reasonable, actual cost of his home office as an ordinary and necessary business expense under sec. 162, I.R.C. 1954.

Petitioner, owner of a boat marina, rented out sheds in the marina for usage by boat owners. Petitioner performed various services for, and sold sundry items to, the boat shed occupants. Held: petitioner's income from the boat shed rentals does not constitute rentals from real estate within the meaning of sec. 1402(a)(1), I.R.C. 1954, and, therefore, petitioner's net earnings from the boat shed rentals are subject to the self-employment tax imposed by sec. 1401.

The petitioner was required by her union to report to the union hall to receive her work assignment for the day. Held: costs incurred in driving to work from the union hall and parking at work are nondeductible commuting expenses.

1. Held: Royalty payments by T corp. to an affiliated foreign company were made pursuant to licensing arrangements such as would have been entered into by parties dealing at arm's length. Held: Royalty payments by T corp. to an affiliated foreign company were made pursuant to licensing arrangements such as would have been entered into by parties dealing at arm's length.

The principal component of a building consisted of a large freezer room in which frozen foods were stored. Held: the freezer room was a storage facility,not a building, within sec. 48(a)(1)(B), I.R.C. 1954, and therefore qualified for the investment credit as section 38 property. Robert E. Catron, 50 T.C. 306, and Central Citrus Co., 58 T.C. 365, followed.

A so-called Astro Needle was an amusement device, some 200 feet high, featuring a passenger-carrying gondola which encircled a vertical tower and which ascended and descended the tower while… Held: the concrete base upon which the tower rested and the tower itself (consisting of steel sections welded or bolted to each other and to the concrete base) were not tangible personal property within sec. 48(a)(1)(A), I.R.C. 1954, and therefore did not qualify as section 38 property.

Petitioners, residents of Washington, were present in a foreign country for more than the requisite 18 months (sec. 911(a)(2), I.R.C. 1954) while husband served in the U.S. Navy. Held: petitioners are collaterally estopped as to both (1) and (2) because it was necessary for Court of Claims to rule on (2) in order to reach its result.

1. Petitioners, and others, organized and incorporated R corporation and received options to purchase stock. Held: the entire amount expended for the offer of rescission transaction (including interest and expenses) is allocable to the purchase of stock and includable in its cost basis. 2. Petitioner was in the business of managing insurance companies.

1. The amounts of petitioner's dealer discount held back by the manufacturer under a plan agreed to by petitioner was taxable to petitioner in the years those amounts were credited by the manufacturer to petitioner's account rather than in the years in which those amounts were received by petitioner. 2.

Schatten-Cypress Co., Inc., leased certain property from the City of Nashville. Held: Schatten-Cypress was the true owner of the leasehold and improvements and not an agent for the partnership. Moline Properties, Inc. v. Commissioner, 319 U.S. 436 (1943); National Carbide Corp. v. Commissioner, 336 U.S. 422 (1949).

Held, a claim on Form 843 for the refund of income taxes paid for 1964, which stated We are claiming Cuban Casualty Losses, Revenue Act 1964, was not an election of the extended carryover provisions… Held: a claim on Form 843 for the refund of income taxes paid for 1964, which stated We are claiming Cuban Casualty Losses, Revenue Act 1964, was not an election of the extended carryover provisions of sec. 172(b)(1)(D), I.R.C. 1954.

Held, that a U.S. shareholder of a controlled foreign corporation must include in gross income his pro rata share of such corporation's… Held: that a U.S. shareholder of a controlled foreign corporation must include in gross income his pro rata share of such corporation's increase in earnings invested in U.S. property for the taxable year to the extent of the corporation's current and accumulated earnings and profits, including earnings and profits accumulated prior to the…

Held, a taxpayer has no constitutional right to refuse to pay an income tax because the conduct of the United States in Southeast Asia was contrary to her religious convictions or because of her… Held: a taxpayer has no constitutional right to refuse to pay an income tax because the conduct of the United States in Southeast Asia was contrary to her religious convictions or because of her belief that such conduct violated international law.

Petitioner, an Italian citizen, filed U.S. Departing Alien Income Tax Return, Form 1040C, when he returned to Italy, his permanent residence. Held: Opinion in Nino Sanzogno, 60 T.C. 321 (1973), followed with respect to taxable year 1966.

Petitioners were shareholders of an electing small business corporation which was actively engaged in the securities business. Held: such gains constituted passive investment income as defined in sec. 1372(e)(5), so that the corporation's status as a small business corporation was terminated in the years in issue.

Interest-free loans (or non-arm's-length loans at less than 5-percent interest) were made between brother-sister corporations. Held: following Kerry Investment Co., 58 T.C. 479, the Commissioner had the power under sec. 482, I.R.C. 1954, to allocate gross income to the lender measured by 5 percent of the loans, where the lender corporation failed to establish that such loans did not generate income to the borrower corporation in an amount equal at least to the…

This Court entered a decision finding deficiencies in income tax and additions to tax under the provisions of sec. 6653(b), I.R.C. 1954, against… Held: the maximum limitation on the amount of the bond to stay assessment and collection pending review of a decision of this Court prescribed by sec. 7485, I.R.C. 1954, is double the amount of the deficiencies in tax and all additions to tax which are found to be due from petitioners in the decision entered by this Court.

Petitioners transferred their interests in unpatented mining claims under a document entitled Mining Lease and Option to Purchase. Held: under the terms of the agreement petitioners did not retain an economic interest in the minerals in place, and the agreement constituted a sale of capital assets rather than a lease, and the amounts received by petitioners were taxable as capital gains.

Held: The statutory notice of deficiency requirements of secs. 6212(a) and 6213(a), I.R.C. 1954, do not apply to the assessment of a 100-percent… Held: The statutory notice of deficiency requirements of secs. 6212(a) and 6213(a), I.R.C. 1954, do not apply to the assessment of a 100-percent penalty under secs. 6671 and 6672 for failure to collect, account for, and pay over taxes withheld from wages, and therefore the Tax Court lacks jurisdiction over such an assessment.

Petitioner is a stock life insurance company which, until 1964, had been exclusively engaged in the industrial (monthly premium) life underwriting business. Held: the withdrawal of the industrial business exhausted both petitioner's shareholders surplus account ($ 24,355) and policyholders surplus account ($ 95,084), thereby triggering a Phase III tax in the amount of $ 39,147.

Held, petitioner's out-of-pocket expenses (except for a portion of the food, laundry, and camping costs and the repair of an automobile)… Held: petitioner's out-of-pocket expenses (except for a portion of the food, laundry, and camping costs and the repair of an automobile) incurred in preaching, teaching, and otherwise carrying out evangelistic work on behalf of his church are deductible under sec. 170(a), I.R.C. 1954, as amplified by sec. 1.170-2(a)(2), Income Tax Regs.

The petitioner, who was a successful accountant and devoted full time to the practice of that profession, purchased 11 and sold 9 parcels of undeveloped land in 4 years. Held: under sec. 1221(1), I.R.C. 1954, the petitioner was not engaged in the trade or business of buying and selling land.

Our Own Deliveries, Inc., a subchapter S corporation, agreed to redeem the stock of two shareholders with payment of 10 percent of the redemption price upon delivery of the stock and the balance over… Held: the payment by the corporation of petitioners' obligation constituted a distribution of money or property by the corporation to petitioners.