In 1948, Susie Salvatore (plaintiff) inherited her husband’s gas-station business. Salvatore’s children operated the gas station and kept most of the proceeds, but Salvatore received enough of the proceeds to cover her living expenses. By 1963, only one of the children, Amedeo, still worked at the gas station. Amedeo opened negotiations to sell the gas-station property (property) to Texaco, Inc. (Texaco). In July 1963, Texaco offered Amedeo $295,000 to buy the property. Later that month, Salvatore accepted Texaco’s offer. The family agreed that Salvatore and her children would divide the sale proceeds, with Salvatore’s share based on the family’s estimate that Salvatore needed $100,000 to support her for the rest of her life. The family also agreed that Salvatore, without consideration, would transfer one-half of her interest in the property to her children. Salvatore made this half-interest transfer in August 1963. The sale was completed in September 1963, when Salvatore and her children each transferred their interests in the property to Texaco. Salvatore received one-half of the net sale proceeds, and the children divided the other half. On her 1963 federal income-tax return, Salvatore reported her half of the sale proceeds as a capital gain. The commissioner of internal revenue (commissioner) (defendant) determined that all of the sale proceeds were taxable as Salvatore’s capital gain. Salvatore petitioned the tax court for a redetermination.