Royal Farms Dairy Co. v. Commissioner
United States Tax Court
A transferred a business in corporate form to B, a charitable foundation. B liquidated the corporation and leased the bulk of the assets to C, a corporation formed to operate the business, in which A held a large minority interest. C was to pay 80 percent of its profits as "rent" to B, who was then to pass on 90 percent of those receipts to A until the original purchase price was paid in full.
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A transferred a business in corporate form to B, a charitable foundation. B liquidated the corporation and leased the bulk of the assets to C, a corporation formed to operate the business, in which A held a large minority interest. C was to pay 80 percent of its profits as "rent" to B, who was then to pass on 90 percent of those receipts to A until the original purchase price was paid in full. Held: 1. The transfer from A to B in this case constituted a bona fide sale of a capital asset. 2. C's "rental" payment disallowed in part because it was not paid for the use of the leased property.…
1Opinion of the Court
TraiN, Judge:
Respondent determined deficiencies in the income tax liability for petitioners for the years and in the amounts as follows:
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The only issue presented as to the individual petitioners is whether the amounts reported by them as installment receipts from the sale of their stock in a creamery company and taxable to the extent of gain at capital gain rates, should instead be treated in entirety as ordinary income.2
The only issue presented as to the corporate petitioner is whether the amounts it paid in the form of rent to University Hill Foundation are deductible as rental…
2Cases cited10 opinions
- Casey v. CommissionerUnited States Tax Court · 1962
- Schumm v. BergCalifornia Supreme Court · 1951
- Davis v. CommissionerUnited States Tax Court · 1956
- Brown v. CommissionerUnited States Tax Court · 1961
- Union Bank, and Anna Goldenberg v. United States. Jerome Goldenberg and Helena Goldenberg v. United States. Ida Goldenberg v. United StatesUnited States Court of Claims · 1961
5 more not listed; retrieve them via the Exa API.
3Cited by21 opinions
- Commissioner v. BrownSupreme Court of the United States · 1965
- Curry v. CommissionerUnited States Tax Court · 1965
- University Hill Foundation v. CommissionerUnited States Tax Court · 1969
- University Hill Foundation, Etc. v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1971
- Brekke v. CommissionerUnited States Tax Court · 1963
16 more not listed; retrieve them via the Exa API.