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Liant Record, Inc. v. Commissioner

United States Court of Appeals for the Second Circuit
303 F.2d 326 (1962)


Facts

Liant Record, Inc. (Liant) and several taxpayers (plaintiffs) owned an office building and leased office space to commercial tenants. In 1953, the office building was condemned, and the plaintiffs were compensated in an amount that exceeded their basis in the building. The plaintiffs used all of their compensation to purchase property leased as residential apartments. The plaintiffs treated their exchange of commercial property for residential property as an involuntary conversion. In reliance on § 1033 of the Internal Revenue Code of 1954, the plaintiffs did not report any federally taxable income from the exchange. The commissioner of internal revenue (commissioner) (defendant) determined that the plaintiffs owed capital-gain taxes on the exchange because § 1033 did not apply. The plaintiffs petitioned the tax court for a redetermination. The tax court accepted the commissioner’s interpretation and ruled for the commissioner. The plaintiffs appealed to the United States Court of Appeals for the Second Circuit.

Rule of Law

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Issue

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Holding and Reasoning (Lumbard, C.J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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