Bradford v. Commissioner
United States Tax Court
34 T.C. 1059 (1960)
- Written by Angela Patrick, JD
Facts
J. C. Bradford (JC) was a partner in an investment firm that dealt with the New York Stock Exchange (the Exchange). JC owed a bank approximately $305,000. The Exchange passed a rule that required JC to submit information about his debts to the Exchange. Concerned that the full debt amount would reflect poorly on his firm, JC arranged for the bank to accept a substitute note from his wife, Eleanor Bradford (plaintiff), for $205,000 of the debt. Eleanor owned approximately $15,000 in assets and relied on JC for income. The bank agreed to use assets owned by JC to secure the note, JC paid the note’s interest, and the parties relied on JC’s earning power to make the deal. Eleanor never expected to pay anything from her own assets toward the note. The commissioner of Internal Revenue (defendant) declared that Eleanor had given JC a $205,000 gift and that she owed tax on that amount. Eleanor petitioned for a determination that she had not gifted any property and, therefore, owed no gift tax.
Rule of Law
Issue
Holding and Reasoning (Drennen, J.)
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