McDermott v. Commissioner
United States Tax Court
Held, on consideration of the documents themselves and the total factual complex surrounding the transactions, that the series of five documents executed by Julian and Mildred in 1943 and 1944, did not constitute a sale or exchange to their controlled corporation of all substantial rights to the patents or inventions which Julian owned at the time or subsequently developed, and the amounts paid to Julian by the corporation as royalties in 1955, are not entitled to treatment…
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Held, on consideration of the documents themselves and the total factual complex surrounding the transactions, that the series of five documents executed by Julian and Mildred in 1943 and 1944, did not constitute a sale or exchange to their controlled corporation of all substantial rights to the patents or inventions which Julian owned at the time or subsequently developed, and the amounts paid to Julian by the corporation as royalties in 1955, are not entitled to treatment as capital gain.
1Opinion of the Court
OPINION
The primary issue is whether the amounts received by Julian from the corporation in 1955 constituted ordinary income or capital gains. The determination of this issue depends upon whether the series of so-called agreements, modifications, and waivers, executed by Julian in his individual capacity and by Mildred for the corporation in 1943 and 1944 amounted to a transfer to the corporation of all substantial rights to the patents which Julian owned at the time or subsequently developed.
At the outset it should be pointed out that section 1235 of the Internal Revenue Code of 19541 is not…
2Cases cited16 opinions
- Sun Printing and Publishing Assn. v. MooreSupreme Court of the United States · 1902
- Littlefield v. PerrySupreme Court of the United States · 1875
- Dreymann v. Comm'rUnited States Tax Court · 1948
- Kronner v. United StatesUnited States Court of Claims · 1953
- Aspinwall, Manuf'g Co. v. GillUnited States Circuit Court · 1887
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3Cited by5 opinions
- Cooper v. Comm'rUnited States Tax Court · 2014
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- James C. Cooper & Lorelei M. Cooper v. CommissionerUnited States Tax Court · 2014
- James C. Cooper & Lorelei M. Cooper v. CommissionerUnited States Tax Court · 2014
- McDermott v. CommissionerUnited States Tax Court · 1963