Hart v. Commissioner
United States Tax Court
On or about December 20, 1956, Federman, an employee of the firm which the petitioner principally used as his stockbroker, and who handled the petitioner's transactions with the firm, advised petitioner of a device whereby, in his opinion, the petitioner could obtain an income tax advantage by selling short a stock on which a large dividend arrearage had been declared, at a price which included the dividend, then pay the dividend to the broker, the amount of which would be…
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On or about December 20, 1956, Federman, an employee of the firm which the petitioner principally used as his stockbroker, and who handled the petitioner's transactions with the firm, advised petitioner of a device whereby, in his opinion, the petitioner could obtain an income tax advantage by selling short a stock on which a large dividend arrearage had been declared, at a price which included the dividend, then pay the dividend to the broker, the amount of which would be deductible from ordinary income in his income tax return, and then covering the short sale by purchasing the stock at a…
1ConcurrenceOpper, J.
This is inherent in the concept of selling property that the vendor does not own. At least as to the “Cuban” transaction it seems to me neither necessary nor reasonable to dispose of the issue on that theory. Petitioners were not in the business of trading or dealing in securities and the dividend cannot be deducted as a business expense. Deputy v. DuPont, 308 U.S. 488, 495—496 (1940); Main Line Distributors, Inc., 37 T.C. 1090 (1962), affd. 321 F. 2d 562 (C.A.6).
It is to no greater extent a cost of the collection or production of income nor an expense of conserving income-producing property…
2Cases cited4 opinions
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Main Line Distributors, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1963
- Main Line Distributors, Inc. v. CommissionerUnited States Tax Court · 1962
- Maytag v. CommissionerUnited States Tax Court · 1959