Widener, Trust No. 5 v. Commissioner
United States Tax Court
Petitioner trust A was formed in 1915 by N. Petitioner trust B was formed in 1938 by N's son. In the taxable year in issue, both trusts had the same income beneficiary, but different contingent beneficiaries. To offset capital gains for the year in issue, trust A sold at a loss certain stocks to trust B, and trust B sold certain stocks at a loss to trust A. All sales were at market price and effectively transferred legal ownership of the shares involved.
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Petitioner trust A was formed in 1915 by N. Petitioner trust B was formed in 1938 by N's son. In the taxable year in issue, both trusts had the same income beneficiary, but different contingent beneficiaries. To offset capital gains for the year in issue, trust A sold at a loss certain stocks to trust B, and trust B sold certain stocks at a loss to trust A. All sales were at market price and effectively transferred legal ownership of the shares involved. Held, the sales in question were bona fide and the trusts' losses are therefore allowed. Sec. 1.267(c)-1, Income Tax Regs.
1Opinion of the Court
Forrester, Judge:
Respondent determined deficiencies in petitioners’ Federal income tax for their fiscal years ending January 31,1975, as follows:
Docket No. Deficiency
2689-78 $19,704
2690-78 13,964
The question presented is whether petitioner trusts may recognize capital losses generated by various stock sales between themselves.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioners Peter A. B. Widener Trust No. 5 (hereinafter PW Trust) and Joseph E. Widener Trust No. 5 (hereinafter JW Trust) timely filed their Federal income tax returns for their respective years…
2Cases cited13 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
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