Boatman v. Commissioner
United States Tax Court
Petitioner in 1951 entered into an executory contract for the sale of his farm. The selling price was $ 60,000 with $ 12,000 payable upon the execution of the contract and the balance payable upon delivery of the deed in 1952. The contract also provided for liquidated damages of 20 per cent of the selling price, or $ 12,000, in case either party defaulted. In 1952 the vendee did not pay the balance of the purchase price of the farm and the sale was not carried out.
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Petitioner in 1951 entered into an executory contract for the sale of his farm. The selling price was $ 60,000 with $ 12,000 payable upon the execution of the contract and the balance payable upon delivery of the deed in 1952. The contract also provided for liquidated damages of 20 per cent of the selling price, or $ 12,000, in case either party defaulted. In 1952 the vendee did not pay the balance of the purchase price of the farm and the sale was not carried out. Petitioner retained the $ 12,000. Held, the $ 12,000 retained by the petitioner was liquidated damages under the contract, due to…
1Opinion of the Court
OPINION.
MulROney, Judge:
Respondent determined a deficiency in petitioners’ income tax and additions to tax under section 294(d) (2) of the Internal Keveime Code of 19391 in the amounts of $1,810.20 and $108.61, respectively, for the year 1952. The issues are:(1) Whether a payment of $12,000 received by petitioners in 1951 upon the execution of a contract to sell real estate and retained by them in 1952 when the prospective vendee failed to carry out the contract is taxable to the petitioners in 1952 as a capital gain or as ordinary income; and(2) Whether there was a substantial underestimate…
2Cases cited9 opinions
- Helvering v. William Flaccus Oak Leather Co.Supreme Court of the United States · 1941
- Iowa v. McFarlandSupreme Court of the United States · 1884
- Bihlmaier v. CommissionerUnited States Tax Court · 1951
- Rogers v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1939
- Rogers v. CommissionerUnited States Board of Tax Appeals · 1938
4 more not listed; retrieve them via the Exa API.
3Cited by27 opinions
- Derr v. CommissionerUnited States Tax Court · 1981
- Lowe v. CommissionerUnited States Tax Court · 1965
- Philip Handelman and Esther Handelman v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1975
- Mittleman v. CommissionerUnited States Tax Court · 1971
- United States Freight Company and Subsidiaries v. The United StatesUnited States Court of Claims · 1970
22 more not listed; retrieve them via the Exa API.