Santucci v. Commissioner
United States Tax Court
T.C. Memo. 1973-178 (1973)
Arnold and Vida Santucci (plaintiffs) owned a car wash on leased land in Richmond, California. In 1968 the property on which the car wash was located was condemned by the San Francisco Bay Area Rapid Transit District through eminent domain. As a result, the Santuccis were awarded approximately $53,460 for their personal property related to the car wash. The Santuccis used the condemnation award to purchase a printing company. On their 1968 income-tax return, the Santuccis reported the condemnation award as a long-term capital gain. The Commissioner of Internal Revenue (the Commissioner) (defendant) determined that the condemnation award was ordinary income. The Santuccis petitioned the United States Tax Court for a redetermination. In front of the tax court, the Santuccis argued that, under § 1033 of the Internal Revenue Code, the condemnation award should not be recognized as a gain at all because it resulted from an involuntary conversion and was used to purchase replacement property.
Rule of Law
Holding and Reasoning (Irwin, J.)
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