S. Prestley Blake and Setsu Blake v. Commissioner of Internal Revenue

OAKES, Circuit Judge:

This appeal presents a familiar problem in the tax law involving step-transaction analysis. The context is one in which a taxpayer “contributes” a substantially appreciated asset to a charitable organization which then liquidates the contribution and purchases another asset from the taxpayer. The question in this case is whether the taxpayer is entitled to treat the transfer of the first asset—corporate stock—as a contribution and treat the transfer of the second asset—a yacht—as a sale, or whether, as the Tax Court held, 1 the transactions here must be recharacterized…