Estate of Smith v. Commissioner
United States Tax Court
Decedent purchased 140 acres of land, transferred it to his solely owned corporation in exchange for an installment note, and immediately discounted it to a third party who financed the purchase. The sole purpose of this format was to avoid Texas usury law. Held, the transaction should be viewed as a purchase by the solely owned corporation. Decedent subsequently transferred his stock in the corporation to a trust.
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Decedent purchased 140 acres of land, transferred it to his solely owned corporation in exchange for an installment note, and immediately discounted it to a third party who financed the purchase. The sole purpose of this format was to avoid Texas usury law. Held, the transaction should be viewed as a purchase by the solely owned corporation. Decedent subsequently transferred his stock in the corporation to a trust. Held, the transfer of stock to the trust did not result in a constructive liquidation. Held further, this transfer did not result in ordinary gain to petitioner through application…
1Opinion of the Court
ESTATE OF CLINT M. SMITH, DECEASED, DONNA J. SMITH, INDEPENDENT EXECUTRIX and DONNA J. SMITH, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Estate of Smith v. Commissioner
Docket No. 8456-75
United States Tax Court
T.C. Memo 1977-433; 1977 Tax Ct. Memo LEXIS 7; 36 T.C.M. (CCH) 1770; T.C.M. (RIA) 770433;
December 27, 1977, Filed
Decedent purchased 140 acres of land, transferred it to his solely owned corporation in exchange for an installment note, and immediately discounted it to a third party who financed the purchase. The sole purpose of this format was to avoid Texas usury law.…
2Cases cited19 opinions
- Moline Properties, Inc. v. CommissionerSupreme Court of the United States · 1943
- Old Colony Trust Co. v. CommissionerSupreme Court of the United States · 1929
- Crane v. CommissionerSupreme Court of the United States · 1947
- Oscanyan v. Arms Co.Supreme Court of the United States · 1881
- Malat v. RiddellSupreme Court of the United States · 1966
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