Azar Nut Co. v. Commissioner
United States Tax Court
Pursuant to an employment contract, petitioner purchased for full market value ($ 285,000) a house owned by a terminated executive employee. Petitioner immediately tried to resell the house but was unable to do so for 2 years, at which time the house was sold for a loss of $ 111,366. Petitioner claimed the loss as an ordinary loss. Respondent disallowed it as an ordinary loss because the house was a capital asset.
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Pursuant to an employment contract, petitioner purchased for full market value ($ 285,000) a house owned by a terminated executive employee. Petitioner immediately tried to resell the house but was unable to do so for 2 years, at which time the house was sold for a loss of $ 111,366. Petitioner claimed the loss as an ordinary loss. Respondent disallowed it as an ordinary loss because the house was a capital asset. Held, petitioner's loss on the resale of the house was a capital loss, not deductible as an ordinary loss. Arkansas Best Corp. v. Commissioner, 485 U.S. 212 (1988).
1Opinion of the Court
DRENNEN, Judge:
Respondent determined a deficiency in petitioner’s Federal income tax liability in the amount of $51,228.38 for the tax year ended June 29, 1985. The sole issue for our decision is whether petitioner is entitled to deduct a loss of $111,366 on the resale of a terminated executive’s house in the tax year ended June 29, 1985. Resolution of this issue is primarily dependent upon whether petitioner held the house other than as a capital asset inasmuch as petitioner was required to purchase the house from its employee pursuant to the terms of an employment contract.
OPINION
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2Cases cited11 opinions
- Commissioner v. TellierSupreme Court of the United States · 1966
- Enoch v. CommissionerUnited States Tax Court · 1972
- T. B. Harms Company v. Edward Eliscu and Ross Jungnickel, Inc.Court of Appeals for the Second Circuit · 1964
- Arkansas Best Corp. v. CommissionerSupreme Court of the United States · 1988
- Commissioner of Internal Revenue v. The Bagley & Sewall Co.Court of Appeals for the Second Circuit · 1955
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- Azar Nut Co. v. CommissionerUnited States Tax Court · 1990
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