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Commissioner v. Culbertson

Citation. Comm’r v. Culbertson, 337 U.S. 733, 69 S. Ct. 1210, 93 L. Ed. 1659, 49-1 U.S. Tax Cas. (CCH) P9323, 37 A.F.T.R. (P-H) 1391, 1949-2 C.B. 5, 1949 P.H. P72,012 (U.S. June 27, 1949)
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Brief Fact Summary.

Respondent was an elderly rancher who wanted to sell his cattle business. He entered into a partnership arrangement where his four sons bought a portion of the heard. There was an issue of who the ranch income should be attributed to because the sons did not contribute much in the way of capital or services to the partnership.

Synopsis of Rule of Law.

Income must be taxed to the one who earns it.


Respondent taxpayer is a rancher who sold half of his interest in his cattle stock to his four children. Respondent and his sons had an oral partnership agreement. The children were ages 24, 22, 18, and 16 at the time of the partnership. A partnership income tax return was filed for years 1940 and 1941. The income was divided among the partners and the Tax Court determined that none of the sons contributed vital services or capital, thus, the income division should not be allowed.


Is the intention to contribute capital or services sometime in the future is sufficient to satisfy the concepts of a partnership?


Chief Justice Vinson issued the opinion for the Supreme Court of the United States in remanding to the Tax Court and holding that the Tax Court should determine if there was a bona fide intent for the partnership, and not just consider whether services or capital were contributed.


Justices Black, Rutledge, Burton, Jackson, and Frankfurter issued concurring opinions but they are omitted from the text.


The test is whether the parties in good faith and acting with a business purposes intended to join together for the partnership. The intent of the parties must be examined based on the facts and the services or capital being furnished by the alleged partner.

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