Porterfield v. Commissioner
United States Tax Court
P sold his ranch and received in partial consideration a $ 178,000 promissory note of the purchaser secured by certificates of deposit of the same value placed by the purchaser in an escrow account. P elected to report the gain from the sale under sec. 453, I.R.C. 1954, relating to installment sales. The parties to the sale intended the escrow account to be security only, and they regarded the purchaser as P's sole debtor.
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P sold his ranch and received in partial consideration a $ 178,000 promissory note of the purchaser secured by certificates of deposit of the same value placed by the purchaser in an escrow account. P elected to report the gain from the sale under sec. 453, I.R.C. 1954, relating to installment sales. The parties to the sale intended the escrow account to be security only, and they regarded the purchaser as P's sole debtor. Held, the creation of the escrow account did not constitute a payment in the year of sale within the meaning of sec. 453(b)(2).
1Opinion of the Court
Simpson, Judge:
The Commissioner determined a deficiency of $79,903.69 in the petitioners’ Federal income tax for 1972. The petitioners have conceded several issues; the sole issue remaining for decision is whether the petitioners were entitled to use the installment method of section 453 of the Internal Revenue Code of 19541 to report the gain on the sale of a ranch. The resolution of such issue turns on whether certain certificates of deposit placed in escrow to secure the performance of the purchaser’s note constitute payment within the year of the sale.
FINDINGS OF FACT
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2Cases cited4 opinions
- H. O. Williams and Mrs. Ada L. Williams v. United StatesCourt of Appeals for the Fifth Circuit · 1955
- Lucas v. CommissionerUnited States Tax Court · 1972
- Oden v. CommissionerUnited States Tax Court · 1971
- Stiles v. CommissionerUnited States Tax Court · 1978
3Cited by11 opinions
- Griffith v. CommissionerUnited States Tax Court · 1980
- Estate of Silverman v. CommissionerUnited States Tax Court · 1992
- Grannemann v. United StatesDistrict Court, E.D. Missouri · 1986
- Hyman v. CommissionerUnited States Tax Court · 1987
- Kenroy, Inc. v. CommissionerUnited States Tax Court · 1984
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