Grodt & McKay Realty, Inc. v. Commissioner
United States Tax Court
Petitioners entered into sales agreements, promissory notes, security agreements, and management agreements with Cattle Co. Pursuant to these agreements, petitioners purportedly purchased units of cattle, consisting of five breeding cows per unit, at $ 30,000 per unit. The purchase price was paid $ 1,000 to $ 1,500 cash on execution of the sales agreement, and the balance in the form of nonrecourse promissory notes.
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Petitioners entered into sales agreements, promissory notes, security agreements, and management agreements with Cattle Co. Pursuant to these agreements, petitioners purportedly purchased units of cattle, consisting of five breeding cows per unit, at $ 30,000 per unit. The purchase price was paid $ 1,000 to $ 1,500 cash on execution of the sales agreement, and the balance in the form of nonrecourse promissory notes. Petitioners also made cash payments in the first 3 years which were designated interest and management fees. The fair market value of the cattle was approximately $ 600 per cow.…
1Opinion of the Court
Hall, Judge:*
Respondent determined the following deficiencies in petitioners’ income taxes:
Petitioner Docket No. Year Deficiency
Grodt & McKay Realty, Inc . 16210-79 1976 1977 $6,885.24 13,567.83
Davis Equipment Corp . 4852-80 1976 1977 3,171.43 4,464.49
The issues for decision are:(1) Whether transactions in which petitioners purportedly purchased cattle were bona fide sales or sham transactions;(2) In the alternative, whether petitioners’ cattle-breeding activities were activities engaged in for profit;(3) In the alternative (a) whether nonrecourse purchase-money notes used to purchase the…
2Cases cited27 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Commissioner v. SunnenSupreme Court of the United States · 1948
- Commissioner v. DubersteinSupreme Court of the United States · 1960
- Helvering v. CliffordSupreme Court of the United States · 1940
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
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3Cited by275 opinions
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- Flowers v. CommissionerUnited States Tax Court · 1983
- Estate of Baron v. CommissionerUnited States Tax Court · 1984
- Cherin v. CommissionerUnited States Tax Court · 1987
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