Duarte v. Commissioner
United States Tax Court
The principal petitioner purported to transfer 50 percent of the stock in a wholly owned corporation to his two children, and then elected to have the corporation taxed as a subchapter S corporation under sections 1371-1377 of the 1954 Code. Held, that said transfers of stock were not bona fide and lacked economic reality; and accordingly, that all of the taxable income of the corporation is taxable to said principal petitioner.
1Opinion of the Court
Pierce, Judge:
Respondent determined a deficiency in income tax against petitioners in the amount of $5,970.45 for the taxable year 1959.
The issues for decision are:(1) Whether the principal petitioner’s purported transfers to his two children of 50 percent of his stock in a wholly owned business corporation, which he then elected to have taxed as a subchapter S corporation under sections 1371-1377 of the 1954 Code, were bona fide and economically real; or whether the transfers were in form only and lacked economic substance, so as to make all of the taxable income of the corporation…
2Cases cited4 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Knetsch v. United StatesSupreme Court of the United States · 1960
- Acuff v. CommissionerUnited States Tax Court · 1960
- Roy C. Acuff, and Wife, Mildred Acuff v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1961
3Cited by24 opinions
- Hook v. CommissionerUnited States Tax Court · 1972
- Hang v. CommissionerUnited States Tax Court · 1990
- William B. Wilson v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1977
- Beirne v. CommissionerUnited States Tax Court · 1969
- Gino A. Speca and Vera Speca v. Commissioner of Internal Revenue, Joseph F. Madrigrano and Shirley M. Madrigrano v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1980
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