Milliken v. Commissioner
United States Tax Court
1. Capital Gain -- Option -- Not Exercised -- Section 117 (g) (2). -- Petitioner sold stock in a corporation in 1940 and received from the corporation an option, then without value, to buy when he chose securities of the corporation at their 1940 values. He agreed with the corporation in 1942 for a cash consideration not to exercise the option.
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1. Capital Gain -- Option -- Not Exercised -- Section 117 (g) (2). -- Petitioner sold stock in a corporation in 1940 and received from the corporation an option, then without value, to buy when he chose securities of the corporation at their 1940 values. He agreed with the corporation in 1942 for a cash consideration not to exercise the option. Held, the 1940 sale was closed for tax purposes in that year and section 117 (g) (2) applies to the 1942 transaction. 2. Capital Loss -- Transferee Paying Tax of Transferor -- Ordinary Loss. -- Payment of transferor's tax by a transferee is deductible…
1Opinion of the Court
OPINION.
Murdock, Judge:
The petitioner contends that the $27,848.24 which he received in 1942 from Cotwool Manufacturing Corporation was a long term capital gain. One of his theories seems to be that the receipt of this money in 1942 was an additional “amount realized” ■on the sale of his Cotwool Manufacturing stock in 1940. That theory is untenable. The evidence shows that the option had no fair market value when received. The fact that it was received by the petitioner in connection with the sale of his Cotwool Manufacturing Corporation stock does not keep that sale open for income tax…
2Cases cited4 opinions
- Fairbanks v. United StatesSupreme Court of the United States · 1939
- Helvering v. William Flaccus Oak Leather Co.Supreme Court of the United States · 1941
- Switlik v. CommissionerUnited States Tax Court · 1949
- Puelicher v. CommissionerUnited States Tax Court · 1946
3Cited by20 opinions
- Golonsky v. CommissionerUnited States Tax Court · 1951
- Humacid Co. v. CommissionerUnited States Tax Court · 1964
- Pike v. CommissionerUnited States Tax Court · 1965
- Saunders v. United StatesDistrict Court, D. Hawaii · 1968
- Milliken v. Commissioner of Internal Revenue. Commissioner of Internal Revenue v. MillikenCourt of Appeals for the Second Circuit · 1952
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