Brown v. Commissioner
United States Tax Court
In 1947, petitioner William H. Brown redeemed notes in the total amount of $ 32,500, secured by a deed of trust on a parcel of property which he and his wife owned. The notes were not canceled nor was the deed of trust released of record at that time. A trustee held the uncanceled notes as the property of petitioner's two minor children and petitioner filed a gift tax return for 1947 reporting cash gifts of $ 16,250 to each of the children.
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In 1947, petitioner William H. Brown redeemed notes in the total amount of $ 32,500, secured by a deed of trust on a parcel of property which he and his wife owned. The notes were not canceled nor was the deed of trust released of record at that time. A trustee held the uncanceled notes as the property of petitioner's two minor children and petitioner filed a gift tax return for 1947 reporting cash gifts of $ 16,250 to each of the children. In 1949, petitioner canceled the notes and released the deed of trust of record. He then gave each child his personal note for $ 16,250. In 1951 and 1952,…
1Opinion of the Court
OPINION.
Rice, Judge:
Petitioners argue that a cash gift of $32,500 was made by William H. Brown to his two children on September 8,1947; that such cash was used to redeem the 74 notes which the 1937 deed of trust secured; and that the subsequent exchange of such notes for petitioner’s personal notes in 1949 resulted in a bona fide debt owed by him to his children, on which petitioners are entitled to deduct interest payments made during the years in issue.
In support of his determination disallowing such deductions, the respondent argues that the substance of the transactions created no bona…
2Cases cited6 opinions
- Commissioner v. CulbertsonSupreme Court of the United States · 1949
- Johnson v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1936
- Coffey v. CommissionerUnited States Tax Court · 1943
- Mercil v. CommissionerUnited States Tax Court · 1955
- Coffey v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1944
1 more not listed; retrieve them via the Exa API.
3Cited by1 opinion
- Brown v. CommissionerUnited States Tax Court · 1956