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Brief Fact Summary. Petitioner had ten children for tax year 1994. They properly claimed 12 exemptions counting their children and themselves. They did not pay any alternative minimum tax.

Synopsis of Rule of Law. The alternative minimum tax is the difference between the tentative minimum tax and the regular tax.

Facts. Petitioners had ten children by the 1994 tax year. Petitioners claimed 12 exemptions and reduced their income by $29,400. They itemized deductions on Schedule A in the amount of $4,767 for medical and dental expenses, and $3,263 for state and local taxes. Petitioners did not compute the alternative minimum tax or report any liability for it. The Commissioner determined there was a deficiency the alternative minimum tax does not allow personal exemptions to be considered in computing the alternative minimum taxable income. After adjustments, Petitioners alternative minimum tax income was $68,832.44.

Issue. Are Petitioners liable for the alternative minimum tax?

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Brief Fact Summary. Petitioners ran an interstate trucking business. They used two adjacent pieces of property to operate the business. The threat of condemnation on one piece forced the sell of both parcels.

Synopsis of Rule of Law. A tax relief provision should be liberally construed to effectuate its purpose.

Facts. Petitioners operated an interstate trucking business. They bought two pieces of land across the street from each other. One parcel held the office and bunkhouse, and the other was used for parking the trucks. Petitioners was forced to sell one piece of property because of the threat of condemnation. Petitioners ended up selling both pieces to buy other similar property because it was not practical to only hold on to one.

Issue. Whether the sale of both pieces of property an involuntary conversion?

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Brief Fact Summary. Petitioner was forced to sell an office building that was leased to tenants. The City of Cincinnati was going to take the property by eminent domain if it was not sold. Petitioner reinvested the money into stock ownership of a hotel.

Synopsis of Rule of Law. A taxpayer does not have to include as income funds derived from the sale of property if the funds are reinvested into “similar or related in service.”

Facts. Petitioner, a real estate investment corporation in Ohio, sold a six-story office building to the City of Cincinnati because they were going to take it by using eminent domain. Petitioner used the building to rent to commercial tenants. The funds from the sale were used to purchase eighty-percent of the stock of The Times Square Hotel of New York. Petitioner claimed that the purchase of the stock was an investment in property similar or related in service or use to the office building it sold. The Commissioner of Internal Revenue found otherwise and assessed a tax deficiency of $19,057.09.

Issue. Was it improper for the Tax Court to have assessed a deficiency in Petitioner’s income tax?

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Brief Fact Summary. Respondent exchanged mineral interests in an undeveloped piece of land with her kids for interest in a city lot. Respondent treated the exchange as a nontaxable like kind exchange of real property.

Synopsis of Rule of Law. Exchanges of real property may be nontaxable if it is a like kind exchange.

Facts. Respondent and her three children owned a tract of land and an improved city lot. The children transferred their interests in the city lot to Respondent, and she transferred oil, gas, and mineral rights to the children. The interest to Respondent had a value of $15,357.77, and the interest to the children had a cost basis of zero. Respondent treated the exchange as a like kind property exchange and nontaxable. The Commissioner of Internal Revenue determined the exchange resulted in a capital gain of the full amount.

Issue. Should the property have been treated as a like kind exchange free from taxation?

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Brief Fact Summary. Taxpayer bought land in order to build a new manufacturing plant. After failing to find financing, Taxpayer entered into an arrangement with Prudential Life Insurance wherein they bought the building and leased it back to Taxpayer.

Synopsis of Rule of Law. A like-kind exchange is a reciprocal transfer of property, and a sale is a transfer of property for monetary consideration only.

Facts. Leslie Company, Taxpayer, is a New Jersey corporation involved in the manufacture and distribution of pressure and temperature regulators and instantaneous water heaters. Taxpayer purchased land for a new facility to construct a new manufacturing plant. Unable to find financing for the plant, Taxpayer entered into an agreement with Prudential Life Insurance where Taxpayer would build the plant and Prudential would purchase it from them. Prudential would lease the facility back to Taxpayer. Taxpayer reported a loss on the sale of the property to Prudential. The Commissioner of Internal Revenue did not allow the loss claiming that the sale and leaseback constituted an exchange of like-kind properties. The Tax Court found that the sale was not an exchange.

Issue. Does the sale and leaseback arrangement constitute an exchange of like-kind properties?

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Brief Fact Summary. Petitioner managed his and his wife’s large estates. In so doing, he would instructed his broker to sell stock of one, and buy for the other account, in order to establish certain losses. These losses were deducted from their gross income.

Synopsis of Rule of Law. Deductions are prohibited for losses from sales or exchanges of property, directly or indirectly, between family members.

Facts. John P. McWilliams, Petitioner, managed the large independent estate of his wife and his own estate. On multiple occasions he ordered his broker to sell certain stock for one account and buy the same number of shares of the same stock for the other account. He told the broker that it was for establishing tax losses. Petitioners filed separate income tax returns and claimed the losses as deductions from gross income.

Issue. Are the losses claimed by Petitioner deductible against gross income?

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Brief Fact Summary. The text has chosen to exclude the facts of the case.

Synopsis of Rule of Law. A sale of property is transferring property in consideration of a definite price in terms of money, and an exchange of property is transferring without the exchange of money.

Facts. The text has chosen to exclude the facts of the case.

Issue. Does the presence of a cash in an exchange prevent the transaction from being classified as an exchange?

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Brief Fact Summary. Taxpayer’s brooch was either lost or stolen during a museum visit.

Synopsis of Rule of Law. Taxpayer must prove be a preponderance of the evidence that an item was stolen in order to deduct the value of the item as a loss under I.R.C. section 23(e)(3)

Facts. Mary Frances Allen (Plaintiff) visited the Metropolitan Museum of Art on Sunday January 21, 1945. Sometime in the two hours she was there, her brooch valued at $2,400 came detached from her dress. She realized this before leaving the museum and notified a guard and searched the rooms in which she had been. She notified the jewelry store at which the brooch was purchased and they put a notice in the New York Times and the Herald offering a $200 reward. Plaintiff also filed a police report for the missing brooch.

Issue. Did Plaintiff sustain her burden of proof that the brooch was stolen and not simply lost?

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Brief Fact Summary. Respondent did not claim annual payments from an agreement arising from the sale of stock as income. Respondent claimed the annual payments to her should not count as income until they exceed the original value of the her capital investment in the stock.

Synopsis of Rule of Law. Profit is not required to be reported until it is actually realized.

Facts. Respondent, Mrs. Logan, owned 250 of 4000 shares of the Andrews & Hitchcock Iron Company. Andrews & Hitchcock owned 12% of the Mahoning Ore & Steel Company. Andrews & Hitchcock sold to Youngstown Sheet & Tube Company which acquired the 12% of the Mahoning Company. The Youngstown Company paid the holder $2.2 million in cash and agreed to pay annual disbursement of proceedings from mining. The Youngstown Company paid large sums out to Respondent for several years. Respondent did not report this as income arguing that such amounts should not be considered income until the total received equals the value of the shares on March 1, 1913.

Issue. Does the money received by Respondent have to be reported as income?

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Brief Fact Summary. Charles Haslam and his wife, Petitioners, attempted to deduct bad business loans. Charles Haslam owned an explosives corporation and personally guaranteed loans during financially difficult times. The corporation eventually went bankrupt.

Synopsis of Rule of Law. Business bad debt losses are only deductible against ordinary income, and non-business bad debt losses are deductible only as short-term capital losses.

Facts. Charles J. Haslam and Harriet S. Haslam, Petitioners, are husband and wife and live in Slingerlands, New York. Petitioner and Earl Canavan established Northern Explosive, Inc. in 1954. The corporation sold and distributed explosives. Each owned 50% having invested $10,000. Petitioner managed the corporate business and was employed as a salesman. Petitioner bought out Canavan in 1957. Northern encountered financial problems and took out loans in the amount of $100,000. Petitioner guaranteed these loans. The corporation would eventually go into bankruptcy. Petitioners claimed a $55,956 business loss on the bad debt from the Northern loans. The Commissioner of Internal Revenue did not allow the deduction determining that it was deductible only as a non-business bad debt.

Issue. Are Petitioners allowed business or non-business deductions for losses arising from the guaranteed debts of Charles J. Haslam’s corporation?