Pratt v. Commissioner
United States Tax Court
64 T.C. 203 (1975)
The tax commissioner (defendant) assessed deficiencies on three years’ worth of tax returns that brothers Edward, William, and Jack Pratt filed jointly with their wives (taxpayers) (plaintiffs). The brothers had formed two limited partnerships to purchase, develop, and operate two shopping centers. Under the partnership agreements, the brothers managed the shopping centers as general partners. The agreements specified that the partnerships were to pay the brothers management fees calculated as a percentage of the rental proceeds from the shopping centers. The partnerships used an accrual method of accounting, whereas the brothers used the cash method. The partnerships accrued and deducted the management fees for three tax years without actually paying those fees to the brothers, while the brothers deferred reporting the fees as income. The commissioner assessed deficiencies, arguing the brothers earned the fees for services performed as partners, making the fees includable in their distributive shares of partnership income when earned. The taxpayers petitioned the tax court for review.
Rule of Law
Holding and Reasoning (Scott, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 705,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 705,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,400 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.