Young v. Commissioner
United States Court of Appeals for the Fourth Circuit
240 F.3d 369 (2001)
In 1988, Louise and John Young (plaintiffs) obtained a divorce. In 1989, they entered into a settlement agreement governing the distribution of their marital assets. Under the terms of the settlement, John executed a $1.5 million promissory note to Louise, secured by 71 acres of property that John had received in the settlement. By October 1990, John was unable to make his payments on the promissory note. Louise brought suit to recover the payments in state court. The court issued a judgment in Louise’s favor. Before Louise took steps to execute the judgment, she and John entered into another settlement agreement in 1992, under which John transferred 59 of his 71 acres of property in full satisfaction of his obligations. The 1992 agreement also included a repurchase option, by which John retained the right to buy back the 59 acres by the end of the year. John assigned the repurchase option to a third party, who purchased the property from Louise for $2.2 million within the allotted time. Neither John nor Louise reported capital gains for the disposition of the 59 acres. The Commissioner (defendant) determined deficiencies against each of them, and they each brought suit in the Tax Court. The Tax Court consolidated their cases and ruled that because the transfer from John to Louise was incident to their divorce, John did not realize a capital gain and Louise adopted John’s adjusted basis. Accordingly, the Tax Court held that Louise owed capital gains taxes for her subsequent sale of the property for $2.2 million.
Rule of Law
Holding and Reasoning (Motz, 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 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read 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. Read more about Quimbee.
Here's why 170,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 13,800 briefs, keyed to 187 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.