Grace Bros., Inc. v. Commissioner
United States Tax Court
1. A corporation, regularly engaged in the manufacture and sale of wine, sold its entire stock and leased its winery to the purchaser after its sole shareholder had decided to discontinue the business. The lease was canceled the following year and the corporation sold the winery to a purchaser unconnected with the lessee.
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1. A corporation, regularly engaged in the manufacture and sale of wine, sold its entire stock and leased its winery to the purchaser after its sole shareholder had decided to discontinue the business. The lease was canceled the following year and the corporation sold the winery to a purchaser unconnected with the lessee. Held: (a) The evidence adduced does not support a finding that any part of the consideration paid for the wine was applicable to the good will of the business. (b) Profit from the sale of the wine was ordinary income and not capital gain, as the intent to discontinue the…
1Opinion of the Court
OPINION.
Johnson, Judge:
The parties are agreed that petitioner realized a profit of $140,133.58 from the sale transaction with Garrett & Co., but petitioner assails the determination that this amount is taxable as ordinary income, advancing three contentions under which all or a part of such profit should be classed as capital gain and so taxed.
First, it argues that despite the literal language of the sale contract and communications leading up to it, the sale was not of wine merely, but also of the good will of the business. Grace testified that in his preliminary negotiations with Weller he…
2Cases cited1 opinion
- Central Inv. Corp. v. CommissionerUnited States Tax Court · 1947
3Cited by21 opinions
- Estate of Ferber v. CommissionerUnited States Tax Court · 1954
- Nestle Holdings v. CommissionerUnited States Tax Court · 1995
- Turner v. CommissionerUnited States Tax Court · 1967
- Berger v. CommissionerUnited States Tax Court · 1996
- Epoch Food Service, Inc. v. CommissionerUnited States Tax Court · 1979
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