Graham v. Commissioner
United States Tax Court
In 1970, petitioner Robert M. Graham's former wife transferred a secret formula to a corporation controlled by them. In return, the corporation agreed to pay her "royalties" based upon proceeds derived from the sale of products using the formula.
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In 1970, petitioner Robert M. Graham's former wife transferred a secret formula to a corporation controlled by them. In return, the corporation agreed to pay her "royalties" based upon proceeds derived from the sale of products using the formula. Joint Federal income tax returns were filed by the couple for 1972, 1973, and 1974. For 1972, she paid a deficiency in income taxes determined with respect to receipts from the corporation and filed a suit for refund in the District Court. That court held that, within the meaning of sec. 1239(a), I.R.C. 1954, (1) the transaction with the corporation…
1Opinion of the Court
OPINION
Featherston, Judge:
Petitioners have filed a motion for summary judgment in these consolidated cases which involve deficiencies in Federal income taxes in the following amounts:
Year Amount Docket No.
1972 $78,095.45 6709-77
1973 134,277.55 6709-77
1974 155,993.97 6709-77
1975 40,926.84 9977-78
The issue presented is whether respondent is collaterally es-topped from contending that certain payments received by petitioners should be treated as ordinary income, rather than capital gain, pursuant to the provisions of section 1239.1
In the 1950’s, Bette C. Graham (hereinafter Bette), former wife…
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