Board of Trade v. Commissioner
United States Tax Court
Petitioner (P) is a taxable membership corporation that operates a futures exchange. When a membership on the exchange is transferred, the transferee must pay P a transfer fee, which, under P's bylaws, is to be used to "purchase, retire or redeem the indebtedness encumbering the Board of Trade Building", which houses P's trading floor and substantial office space leased to third-party tenants.
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Petitioner (P) is a taxable membership corporation that operates a futures exchange. When a membership on the exchange is transferred, the transferee must pay P a transfer fee, which, under P's bylaws, is to be used to "purchase, retire or redeem the indebtedness encumbering the Board of Trade Building", which houses P's trading floor and substantial office space leased to third-party tenants. Held, the transfer fees are nontaxable contributions to capital, rather than taxable payments for services, because the transferees pay the fees with an investment motive, as evidenced by (1) the…
1Opinion of the Court
Beghe, Judge:
Respondent determined deficiencies in petitioner’s Federal income tax for the years 1988, 1989, and 1990 in the amounts of $108,859, $113,473, and $65,051, respectively.
The deficiencies arise from respondent’s inclusion in petitioner’s gross income of membership transfer fees. The sole issue is whether the membership transfer fees paid to petitioner during 1988, 1989, and 1990 are contributions to capital or payments for services. We hold the transfer fees to be excluded from gross income as contributions to capital.
FINDINGS OF FACT
The parties have stipulated some facts, and the…
2Cases cited30 opinions
- Freuler v. HelveringSupreme Court of the United States · 1934
- General Utilities & Operating Co. v. HelveringSupreme Court of the United States · 1935
- City of New York v. SaperSupreme Court of the United States · 1949
- Recklitis v. CommissionerUnited States Tax Court · 1988
- Stark v. CommissionerUnited States Tax Court · 1986
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