Brief Fact Summary. Plaintiffs were equal partners in a partnership that bought a Beechcraft airplane. During the ownership of the plane, it was used 26% of the time for business purposes and the remaining was for personal use. The partnership sold the plane in 1954 for $35,380.
Synopsis of Rule of Law. The loss recognized on the sale of property is the excess of the adjusted basis over the amount realized from the sale of the property.
Issue. Should Plaintiffs be taxed on the gain from the sale?
Held. District Judge Layton issued the opinion for the United States District Court in holding against the Plaintiffs and finding that the Plaintiffs did realize taxable gain.
Discussion. The District Court found that allocating the proceeds from the sale in accordance with the percentage of business and personal use was “practical and fair.” The Commissioner’s rule was fair and would provide uniformity in tax treatment.