Vaughan v. Commissioner
United States Tax Court
1. Certain petitioners were members of a partnership which had owned and operated a beef cattle ranch. Prior to the taxable years in issue the partnership had sold the ranch and range rights to M who also "leased" the herd of beef cattle. Under the "lease," M agreed to run the herd as an operating cattle unit and sell cattle from it, dividing the proceeds of the sales equally between M and the partnership.
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1. Certain petitioners were members of a partnership which had owned and operated a beef cattle ranch. Prior to the taxable years in issue the partnership had sold the ranch and range rights to M who also "leased" the herd of beef cattle. Under the "lease," M agreed to run the herd as an operating cattle unit and sell cattle from it, dividing the proceeds of the sales equally between M and the partnership. At the close of the agreement, M was to return to the partnership an equal number, by sex and age, of cattle. Held, the income so derived by the partnership constituted the proceeds of…
1Opinion of the Court
OPINION.
Black, Judge:
Petitioners contend that the proceeds of all sales of cows, bulls, and heifers during the term of their agreement with Milford are taxable as capital gains derived from the sale of animals held for breeding purposes within the meaning of section 117 (]) (1) of the Internal Revenue Code of 1939.3
Respondent first contends that the agreement between the partnership and Milford was a lease, creating a lessor-lessee relationship, and consequently that any income derived by the partnership thereunder must necessarily be ordinary income. It was not. The income which the…
2Cases cited15 opinions
- Helvering v. San Joaquin Fruit & Investment Co.Supreme Court of the United States · 1936
- McFeely v. CommissionerSupreme Court of the United States · 1935
- United States v. Bennett (Two Cases). Finch v. Arnold, Acting Collector of Internal Revenue (Two Cases). Birkbeck v. Thomas. Ritchie v. ThomasCourt of Appeals for the Fifth Circuit · 1951
- Albright v. United StatesCourt of Appeals for the Eighth Circuit · 1949
- Fawn Lake Ranch Co. v. Comm'rUnited States Tax Court · 1949
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3Cited by1 opinion
- Vaughan v. CommissionerUnited States Tax Court · 1961