Crown v. Commissioner
United States Tax Court
Petitioner was a one-third partner in Areljay Co., Not Incorporated. Areljay made substantial non-interest-bearing demand or open account loans to 24 trusts established for various relatives, most of whom were children. Held, petitioner is not subject to the gift tax on his proportionate share of the partnership's outstanding loans because the making of non-interest-bearing loans under these circumstances is not a taxable event.
1DissentSimpson, J.
Here, we have interest-free loans by the partnership in excess of $15 million and, if the gift is measured as suggested by the Commissioner, there is a gift in excess of $1 million. To conclude that such a transfer is not a taxable gift is inconsistent with the explicit terms of the statute, its intended scope as set forth in the legislative history, longstanding Treasury regulations, and the Supreme Court’s expansive interpretation of such provision. To hold that such a transfer is not a taxable gift also ignores economic reality. Nor is the Court correct in its assertion that the…
2Cases cited11 opinions
- Automobile Club of Mich. v. CommissionerSupreme Court of the United States · 1957
- Dixon v. United StatesSupreme Court of the United States · 1965
- Commissioner v. WemyssSupreme Court of the United States · 1945
- Dean v. CommissionerUnited States Tax Court · 1961
- Thriftimart, Inc. v. CommissionerUnited States Tax Court · 1973
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