Brief Fact Summary. Petitioner’s husband died and left her title to the oil and gas service station that she ran. She and her children decided to sell the property to Texas. Prior to the sale, Petitioner transferred one-half of her interest to her children.
Synopsis of Rule of Law. A sale by one person cannot be transformed for tax purposes into a sale by another by using the latter as a conduit through which to pass title.
Issue. Is Petitioner taxable on all or only one-half of the gain realized on the sale of the real property?
Held. Judge Featherston issued the opinion for the Tax Court in holding that the full amount is taxable as capital gain.
Discussion. Petitioner transferred the property to her children to avoid taxes and they only acted as a conduit. She had already contracted to sell the property. The assignment to her children was done without consideration.