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Clifton Investment Co. v. Commissioner

United States Court of Appeals for the Sixth Circuit
312 F.2d 719 (1963)


Facts

Clifton Investment Corporation (Clifton) (plaintiff) is a real estate corporation that owned a downtown office building, which it rented out to commercial tenants. In 1956, Clifton sold the building to the city of Cincinnati after the city threatened to exercise its power of eminent domain. Clifton used the proceeds from the sale to purchase 80 percent of the outstanding stock of The Times Square Hotel of New York, Inc., which operated the Times Square Hotel of New York City. Clifton sought to avoid recognition of the gain realized from the sale of the office building under § 1033(a)(3)(A) of the Internal Revenue Code. Clifton argued that the downtown office building and the hotel corporation were both property held for the production of rental income and were therefore “similar or related in service or use.” The Commissioner (defendant) disagreed and held that the gain was recognizable. The Tax Court affirmed the Commissioner’s ruling.

Rule of Law

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Issue

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Holding and Reasoning (Boyd, J.)

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Concurrence (Miller, J.)

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