Friedman v. Commissioner
United States Tax Court
1. Transfer of interest in established business to minor children contributing no new capital nor any services, held not sufficient to create valid partnership therein for income tax purposes, so as to relieve from tax petitioner-fathers, whose personal services were major income-producing factor, notwithstanding that some services were rendered to business by an employee, selected as "nominee" for the children by their legal guardians. 2. Partnership interest originating in…
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1. Transfer of interest in established business to minor children contributing no new capital nor any services, held not sufficient to create valid partnership therein for income tax purposes, so as to relieve from tax petitioner-fathers, whose personal services were major income-producing factor, notwithstanding that some services were rendered to business by an employee, selected as "nominee" for the children by their legal guardians. 2. Partnership interest originating in capital owned prior to marriage, held transformed into community property by agreement of spouses. 3. Interests in…
1Opinion of the Court
OPINION.
L
Opper, Judge:
For simplicity the issue relating to the validity of the partnership with petitioners’ children will first be considered. This would be a mere routine case for application of the Tower and Lusthaus2 principle were it not for an ingenious device strenuously advanced by petitioners as an element controlling in the opposite direction. The children obviously contributed no new capital originating with them; they rendered no services, vital, managerial, or otherwise, to the partnership. But services of some sort were rendered to the business by an individual who was selected…
2Cases cited7 opinions
- Lucas v. EarlSupreme Court of the United States · 1930
- Commissioner v. TowerSupreme Court of the United States · 1946
- Kenney v. KenneyCalifornia Supreme Court · 1934
- Greene v. CommissionerUnited States Tax Court · 1946
- Mauldin v. CommissionerUnited States Tax Court · 1945
2 more not listed; retrieve them via the Exa API.
3Cited by1 opinion
- Friedman v. CommissionerUnited States Tax Court · 1948