Donald B. Jones and Beverley v. Jones v. Commissioner of Internal Revenue

Third Circuit

Donald B. Jones and Beverley v. Jones v. Commissioner of Internal Revenue

330 F.2d 302, 13 A.F.T.R.2d (RIA) 1153, 1964 U.S. App. LEXIS 5801

CourtCourt of Appeals for the Third Circuit

DecidedApril 7, 1964

Docket14611_1

StatusPublished

Cited by3 cases

This text of 330 F.2d 302 (Donald B. Jones and Beverley v. Jones v. Commissioner of Internal Revenue) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Donald B. Jones and Beverley v. Jones v. Commissioner of Internal Revenue, 330 F.2d 302, 13 A.F.T.R.2d (RIA) 1153, 1964 U.S. App. LEXIS 5801 (3d Cir. 1964).

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Opinion

PER CURIAM.

Taxpayer, inter alia, purchases remainder interests in trusts. In the two interests before us in this review, as is his practice, after the deaths of the life tenants but prior to the distribution of the estate remainders of the trusts, he transferred his interests therein. His motivation is to obtain capital gains treatment for income tax purposes. The Tax Court held that the taxpayer could not transmute gain which would be ordinary income to him into capital gain by the device of a sale, notwithstanding that the sale was the bona fide sale of a capital asset. The Commissioner argues for the sustaining of the decision on the theory that the taxpayer’s gain upon the sales of the remainders represents an increase in value attributable to interest income, in the form of an interest discount in his original purchase price for the remainders. We are impressed with this and in connection therewith consider it necessary to remand the case to the Tax Court for further proceedings to determine what part, if any, of the gain received upon the taxpayer’s sale of the remainders was in fact the realization of interest discount and, if the latter is established, to make an allocation of the proceeds between its ordinary income and capital gain components.

The decision will be vacated and the case remanded to the Tax Court for further proceedings in line with this opinion.

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PER CURIAM.

Taxpayer, inter alia, purchases remainder interests in trusts. In the two interests before us in this review, as is his practice, after the deaths of the life tenants but prior to the distribution of the estate remainders of the trusts, he transferred his interests therein. His motivation is to obtain capital gains treatment for income tax purposes. The Tax Court held that the taxpayer could not transmute gain which would be ordinary income to him into capital gain by the device of a sale, notwithstanding that the sale was the bona fide sale of a capital asset. The Commissioner argues for the sustaining of the decision on the theory that the taxpayer’s gain upon the sales of the remainders represents an increase in value attributable to interest income, in the form of an interest discount in his original purchase price for the remainders. We are impressed with this and in connection therewith consider it necessary to remand the case to the Tax Court for further proceedings to determine what part, if any, of the gain received upon the taxpayer’s sale of the remainders was in fact the realization of interest discount and, if the latter is established, to make an allocation of the proceeds between its ordinary income and capital gain components.

The decision will be vacated and the case remanded to the Tax Court for further proceedings in line with this opinion.

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Bluebook (online)

330 F.2d 302, 13 A.F.T.R.2d (RIA) 1153, 1964 U.S. App. LEXIS 5801, Counsel Stack Legal Research, https://law.counselstack.com/opinion/donald-b-jones-and-beverley-v-jones-v-commissioner-of-internal-revenue-ca3-1964.

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