McMullan v. United States

This income tax case presents three issues, two of which we considered in Wilmington Trust Co. v. United States1 (Wilmington), and one that we have not previously addressed. In Wilmington, we held that the present plaintiffs were entitled to report certain timber sales as capital gains, either under 26 U.S.C. § 631(b)2 or under 26 U.S.C. § 1221,3 and that plaintiffs could deduct the related expenses against ordinary income. We also held that the Government was not entitled to offset plaintiffs’ income tax recovery by the resulting decrease in estate tax deductions under the doctrine of…