Strauss v. Commissioner
United States Tax Court
In 1949, petitioners sold their manufacturing plant to the State of California under threat of condemnation. Prior to receipt of the proceeds from the sale, petitioners purchased replacement property with borrowed funds and, immediately upon receipt of the proceeds, repaid the loan.
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In 1949, petitioners sold their manufacturing plant to the State of California under threat of condemnation. Prior to receipt of the proceeds from the sale, petitioners purchased replacement property with borrowed funds and, immediately upon receipt of the proceeds, repaid the loan. Held, repayment of the loan was a sufficient tracing of the award money into the replacement property to meet the requirements of section 112 (f) of the Internal Revenue Code, and gain is recognized only on the $ 48,823.70 which petitioners did not spend in acquiring or improving such replacement property.
1Opinion of the Court
OPINION.
Rice, Judge:
This proceeding involves a deficiency in income tax for the year 1949 of $13,282.53. The issue to be determined is whether the gain resulting from the involuntary conversion of property is to be recognized where the petitioners, in anticipation of the award, acquired similar property with borrowed funds. Other adjustments made in the deficiency notice have not been contested, and will be taken into account under a Rule 50 computation.
All of the facts were stipulated, are so found, and are incorporated herein by this reference.
The petitioners were husband and wife, and…
2Cases cited4 opinions
- Vim Securities Corporation v. Commissioner of Int. Rev.Court of Appeals for the Second Circuit · 1942
- Bandes v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1934
- Kennebec Box & Lumber Co. v. CommissionerCourt of Appeals for the First Circuit · 1948
- Twinboro Corp. v. CommissionerCourt of Appeals for the Second Circuit · 1945
3Cited by4 opinions
- Cameron Machine Co. v. CommissionerUnited States Tax Court · 1955
- Cameron Machine Co. v. CommissionerUnited States Tax Court · 1955
- State Distributors, Inc. v. United StatesDistrict Court, D. New Jersey · 1957
- Strauss v. CommissionerUnited States Tax Court · 1954