Calloway v. Commissioner
United States Tax Court
In August 2001 P entered into an agreement with Derivium whereby P transferred 990 shares of IBM common stock to Derivium in exchange for $93,586.23. The terms of the agreement characterized the transaction as a loan of 90 percent of the value of the IBM stock pledged as collateral. The purported loan was nonrecourse and prohibited P from making any interest or principal payments during the 3-year term of the purported loan.
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In August 2001 P entered into an agreement with Derivium whereby P transferred 990 shares of IBM common stock to Derivium in exchange for $93,586.23. The terms of the agreement characterized the transaction as a loan of 90 percent of the value of the IBM stock pledged as collateral. The purported loan was nonrecourse and prohibited P from making any interest or principal payments during the 3-year term of the purported loan. The terms of the agreement allowed Derivium to sell the stock, which it did immediately upon receipt. At maturity P had the option of either paying the balance due and…
1Opinion of the Court
Ruwe, Judge:
Respondent determined a $30,911 deficiency, a $6,583 addition to tax under section 6651(a)(1)1 for failure to timely file, and a $6,182.20 accuracy-related penalty under section 6662(a) in regard to petitioners’ 2001 Federal income tax. The issues we must decide are: (1) Whether a transaction in which Albert L. Calloway (petitioner) transferred 990 shares of International Business Machines Corp. (IBM) common stock to Derivium Capital, L.L.C. (Derivium), in exchange for $93,586.23 was a sale or a loan; (2) whether the transaction qualifies as a securities lending arrangement; (3)…
2Cases cited36 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Freytag v. CommissionerSupreme Court of the United States · 1991
- HIGBEE v. COMMISSIONER OF INTERNAL REVENUEUnited States Tax Court · 2001
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- United States v. BoyleSupreme Court of the United States · 1985
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3Cited by27 opinions
- Lizzie W. Calloway v. Commissioner of IRSCourt of Appeals for the Eleventh Circuit · 2012
- Robinson v. Comm'rUnited States Tax Court · 2011
- Carlebach v. CommissionerUnited States Tax Court · 2012
- Reddam v. Comm'rUnited States Tax Court · 2012
- Sollberger v. CommissionerCourt of Appeals for the Ninth Circuit · 2012
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