Davenport v. Commissioner
United States Tax Court
Greenbelt derived more than 50 percent of its gross receipts from interest. Held: Greenbelt was not largely an operating company. Its stock is therefore not sec. 1244, I.R.C. 1954, stock, and losses thereon are not sec. 1244, I.R.C. 1954, losses. Sec. 1.1244(c)-1(g)(2), Income Tax Regs., followed. Petitioner's purchases of Greenbelt stock and loans to Greenbelt were motivated by investment reasons.
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Greenbelt derived more than 50 percent of its gross receipts from interest. Held: Greenbelt was not largely an operating company. Its stock is therefore not sec. 1244, I.R.C. 1954, stock, and losses thereon are not sec. 1244, I.R.C. 1954, losses. Sec. 1.1244(c)-1(g)(2), Income Tax Regs., followed. Petitioner's purchases of Greenbelt stock and loans to Greenbelt were motivated by investment reasons. Held, petitioners were not entitled to ordinary loss treatment when the stock and loans became worthless.
1DissentWilbur, J.
I agree with Judge Featherston that petitioner was “largely an operating company” within the meaning of section 1.1244(c)-l(g)(2), Income Tax Regs., and that language differences in sections 1371 and 1244 make it unnecessary to frustrate the basic purposes of section 1244 by applying precedents that interpret section 1371 in an extremely literal manner.
Nevertheless, both sections 1371 and 1244 were enacted contemporaneously, both are designed to assist small business, and both employ identical language to disqualify corporations with excess receipts from sources other than “royalties, rents,…
2Cases cited10 opinions
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Jasper L. House, Jr., and Edra F. House v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1972
- Buhler Mortg. Co. v. CommissionerUnited States Tax Court · 1969
- Marshall v. CommissionerUnited States Tax Court · 1973
- Paul E. And Ruth v. Puckett v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1975
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