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Susie Salvatore v. Commissioner

United States Tax Court
29 T.C.M. 89 (1970)


Facts

Susie Salvatore’s (plaintiff’s) husband owned and operated an oil and gas service station before his death in 1948. He bequeathed the station to Salvatore, and Salvatore’s children continued to operate it after his death. By 1963, the station property had become more valuable, and Texaco offered to purchase it from the family. The family decided to accept the offer, agreeing that Salvatore would receive half the profits and her five children would split the remainder equally. After finalizing the deal with Texaco, Salvatore deeded half of her interest in the station property to her children. Salvatore and her children then deeded their individual interests in the property to Texaco. On their income tax returns for 1963, Salvatore reported her one-half share of the capital gain from the sale. She also filed a federal gift tax return for that year, reporting the one-tenth share in the station property she deeded to each of her children. The Commissioner (defendant) found that Salvatore was liable for taxes on the entire gain upon sale of the property.

Rule of Law

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Issue

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Holding and Reasoning (Featherston, 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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