Malkan v. Comm'r
United States Tax Court
1. Held, shares of corporate stock were sold by petitioner rather than trusts of which he was the settlor-trustee, where he and the purchasers had agreed upon all the terms of the sale prior to the creation of the trusts and he participated in the closing in his individual capacity. 2. Held, further, for the purpose of determining the basis of the shares sold, petitioner's assignment of 16,000 GTC shares under an escrow agreement, executed prior to the closing of the sale,…
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1. Held, shares of corporate stock were sold by petitioner rather than trusts of which he was the settlor-trustee, where he and the purchasers had agreed upon all the terms of the sale prior to the creation of the trusts and he participated in the closing in his individual capacity. 2. Held, further, for the purpose of determining the basis of the shares sold, petitioner's assignment of 16,000 GTC shares under an escrow agreement, executed prior to the closing of the sale, constituted the first transfer under the "first-in, first-out" rule of sec. 1.1012-1(c), Income Tax Regs.
1Opinion of the Court
OPINION
The principal issue is a variation of the familiar problem of substance versus form. There is no dispute that gain was realized on the sale of the 10,500 shares of GTC stock; the question is, who realized the gain, the four trusts or petitioner ? Emphasizing his long-term plans to create trusts and the signing of the trust instruments before the underwriting agreement, petitioner insists that the trusts made the sale and realized the gain therefrom. Respondent, on the other hand, urges that the substance of the transaction is that petitioner himself made the sale, and then placed the…
2Cases cited20 opinions
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- United States v. Cumberland Public Service Co.Supreme Court of the United States · 1950
- Minnesota Tea Co. v. HelveringSupreme Court of the United States · 1938
- Kimbell-Diamond Milling Co. v. Comm'rUnited States Tax Court · 1950
- Kimbell-Diamond Milling Co. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1951
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3Cited by19 opinions
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- Edgar v. CommissionerUnited States Tax Court · 1971
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- Hallowell v. CommissionerUnited States Tax Court · 1971
- Pityo v. CommissionerUnited States Tax Court · 1978
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