Madorin v. Commissioner
United States Tax Court
Petitioner was the grantor of four trusts. Because the trustee of the trusts had the power to add beneficiaries, the trusts were grantor trusts pursuant to sec. 674(a), I.R.C. 1954. The trusts purchased limited partnership interests in Metro, which in turn purchased a limited partnership interest in Saintly. Petitioner, as grantor, recognized on his joint income tax return the losses generated by Saintly.
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Petitioner was the grantor of four trusts. Because the trustee of the trusts had the power to add beneficiaries, the trusts were grantor trusts pursuant to sec. 674(a), I.R.C. 1954. The trusts purchased limited partnership interests in Metro, which in turn purchased a limited partnership interest in Saintly. Petitioner, as grantor, recognized on his joint income tax return the losses generated by Saintly. At the point Saintly began generating income, the trustee renounced his power to add beneficiaries, and the trusts ceased to be grantor trusts, i.e., they were perfected. Held, sec.…
1Opinion of the Court
OPINION
Dawson, Chief Judge:
Respondent determined a deficiency of $27,618 in petitioners’ Federal income tax for the taxable year 1978. The issues for decision are: (1) Whether section 1.1001-2(c), example (5), Income Tax Regs., should be declared invalid as an unwarranted extension of sections 671, 674, and 1001;1 (2) if the regulation is’ valid, whether the regulation should be applied retroactively; and (3) if the regulation is applied retroactively against petitioners, whether the gain recognized by petitioners should be treated as ordinary income or long-term capital gain.
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2Cases cited29 opinions
- Commissioner v. South Texas Lumber Co.Supreme Court of the United States · 1948
- Old Colony Trust Co. v. CommissionerSupreme Court of the United States · 1929
- Automobile Club of Mich. v. CommissionerSupreme Court of the United States · 1957
- Crane v. CommissionerSupreme Court of the United States · 1947
- United States v. CorrellSupreme Court of the United States · 1967
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3Cited by6 opinions
- Pacific First Fed. Sav. Bank v. CommissionerUnited States Tax Court · 1993
- Mingo v. CommissionerCourt of Appeals for the Fifth Circuit · 2014
- Jason B. Sage v. CommissionerUnited States Tax Court · 2020
- Lori M. & John M. Mingo v. CommissionerUnited States Tax Court · 2013
- Madorin v. CommissionerUnited States Tax Court · 1985
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