Otey v. Commissioner
United States Tax Court
Petitioner formed a partnership with one Thurman to construct FHA-financed housing on property owned by petitioner. Pursuant to the partnership agreement, petitioner would contribute the property to the partnership at an agreed value of $ 65,000, and an FHA-insured construction loan would be taken out in an amount greater than needed for the construction, of which petitioner would draw $ 65,000. Partnership profits and losses would thereafter be shared equally.
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Petitioner formed a partnership with one Thurman to construct FHA-financed housing on property owned by petitioner. Pursuant to the partnership agreement, petitioner would contribute the property to the partnership at an agreed value of $ 65,000, and an FHA-insured construction loan would be taken out in an amount greater than needed for the construction, of which petitioner would draw $ 65,000. Partnership profits and losses would thereafter be shared equally. Thurman contributed no capital, but his credit was essential to obtain the loan. Held, petitioner's transfer to the partnership of…
1Opinion of the Court
Hall, Judge:
Respondent determined the following deficiencies in petitioners' Federal income tax:
Year Deficiency
1969 .$4,718.87
1970 . 3,364.20
1971 . 105.75
Due to concessions by petitioners, the sole issue for decision is whether petitioners incurred net operating losses in 1972 which they are entitled to carry back to the years in issue. Resolution of this issue depends upon whether a payment by a partnership to petitioner (a partner) of $64,750 following petitioner’s conveyance of real property to the partnership constitutes a sale of the property to the partnership or a contribution of the…
2Cases cited2 opinions
- Davis v. CommissionerUnited States Tax Court · 1970
- Oliver v. CommissionerUnited States Tax Court · 1954
3Cited by21 opinions
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- Barenholtz v. CommissionerUnited States Tax Court · 1981
- Richard O. Jacobson, Cheryl H. Jacobson, Lawrence E. Larson, and Donna C. Larson v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1992
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