Kohn v. Commissioner
Opinion
*21 Sales of listed securities through the New York Stock Exchange by several members of a family, followed by purchases through the Exchange of like securities at the same prices by other members of the family, held, not sales "between members of the family" within the meaning of
Memorandum Findings of Fact and Opinion
ARUNDELL, Judge: This proceeding involves a redetermination of deficiency in income*22 tax for the calendar year 1941 in the amount of $1,037.14 of which $928.92 is in controversy. The sole issue concerns the correctness of the respondent's action in disallowing certain long-term capital losses under
[The Facts]
The petitioners are husband and wife, residing at Columbia, South Carolina. They filed a joint income tax return with the collector for the district of South Carolina.
Petitioner August Kohn, Jr., bought and sold securities for his own account and frequently, as agent, for the account of his wife. At times Mrs. Kohn bought and sold securities in her own right. Each petitioner maintained a brokerage account with the Columbia, South Carolina, branch of the firm of Merrill Lynch, Pierce, Fenner & Beane, a member of the New York Stock Exchange. Petitioners maintained separate individual bank accounts at different banks. Neither was authorized to draw checks on the account of the other.
Petitioners concede that the sales transactions hereinafter referred to were entered into for the purpose of establishing losses for tax purposes. *23 In December, 1941, petitioner August Kohn, Jr., instructed the brokerage firm to sell for his or his wife's account a specified number of shares of the stock of particular companies. At the same time in some instances he instructed the brokers to buy a like number of shares of the same stock for the account of the non-selling family member. At other times, instructions to buy were given by him shortly before or after the instructions to sell. Shares of stock in different corporations were sold. The trade date of the purchase of shares in five of the companies was the same as the trade date of sale, while the trade date of purchase of the shares in seven companies followed the trade date of sale by one or two days. The sales price and the purchase price were slightly different in a majority of the transactions.
All of the stocks in question were listed on the New York Stock Exchange and the purchases and sales, some of which were odd-lot transactions, were made in regular course of business at that Exchange. Neither petitioner knew to whom he sold or from whom he bought. Neither purchaser received the identical certificate formerly held by the other. All of the stocks had been held*24 by the respective petitioners for two years or more.
The stock in question, dates of acquisition, cost, dates of sale, sales price and amount of loss thereon were as follows:
| Date of | Date of | Sale | |||
| Stock | Acquisition | Cost | Sale | Price | Loss |
| Stocks Sold by August Kohn, Jr. | |||||
| 100 shares T.W.A., Inc. | 2/ 5/37 | $2,012.50 | 12/19/41 | $ 908.73 | $1,103.77 |
| 100 shares Natl. Dept. | |||||
| Stores | 7/27/37 | 1,762.50 | 12/19/41 | 408.99 | 1,353.51 |
| 50 shares U.S. Rubber | 12/30/38 | 2,625.00 | 12/17/41 | 816.23 | 1,808.77 |
| 40 shares Crane Co. | 1/11/39 | 1, | |||
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4 T.C.M. 1050 (Kohn v. Commissioner) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.