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Supreme Court of the United States
February 7, 1949, Argued ; June 27, 1949, Decided
[*735] [**1211] [***1661] [****5] MR. CHIEF JUSTICE VINSON delivered the opinion of the Court.
This case requires our further consideration of the family partnership problem. The Commissioner of Internal Revenue ruled that the entire income from a partnership allegedly entered into by respondent and his four sons must be taxed to respondent, 1 and the Tax Court sustained that determination. The [***1662] Court of Appeals for the Fifth Circuit reversed. 168 F.2d 979. We granted certiorari, 335 U.S. 883, to consider the Commissioner's claim that the principles of Commissioner v. Tower, 327 U.S. 280 (1946), [****6] and Lusthaus v. Commissioner, 327 U.S. 293 (1946), have been departed from in this and other courts of appeals decisions.
Respondent taxpayer is a rancher. From 1915 until October 1939, he had operated a cattle business in partnership with R. S. Coon. Coon, who had numerous business interests in the Southwest and had largely financed the partnership, was 79 years old in 1939 and desired to dissolve the partnership because of ill health. To that end, the bulk of the partnership herd was sold until, in October of that year, only about 1,500 head remained. These cattle were all registered Herefords, the brood or foundation herd. Culbertson wished to keep these cattle and approached Coon with an offer of $ 65 a head. Coon agreed to sell at that price, but only upon [*736] condition that Culbertson would sell [****7] an undivided one-half interest in the herd to his four sons at the same price. His reasons for imposing this condition were his intense interest in maintaining the Hereford strain which he and Culbertson had developed, his conviction that Culbertson was too old to carry on the work alone, and his personal interest in the Culbertson boys. Culbertson's sons were enthusiastic about the proposition, so respondent thereupon bought the remaining cattle from the Coon and Culbertson partnership for $ 99,440. Two days later Culbertson sold an undivided one-half interest to the four boys, and the following day they gave their father a note for $ 49,720 at 4 per cent interest due one year from date. Several months later a new note for $ 57,674 was executed by the boys to replace the earlier note. The increase in amount covered the purchase by Culbertson and his sons of other properties formerly owned by Coon and Culbertson. This note was paid by the boys in the following manner: $
Credit for overcharge
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
337 U.S. 733 *; 69 S. Ct. 1210 **; 93 L. Ed. 1659 ***; 1949 U.S. LEXIS 3078 ****; 49-1 U.S. Tax Cas. (CCH) P9323; 37 A.F.T.R. (P-H) 1391; 1949-2 C.B. 5; 1949 P.H. P72,012
COMMISSIONER OF INTERNAL REVENUE v. CULBERTSON ET UX.
Prior History: [****1] CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.
The Commissioner's determination of a deficiency in respondent's income tax for 1940 and 1941 was sustained by the Tax Court. The Court of Appeals reversed. 168 F.2d 979. This Court granted certiorari. 335 U.S. 883. Reversed and remanded, p. 748.
Disposition: 168 F.2d 979, reversed.
partnership, vital, ranch, taxation, gift, join, cattle
Tax Law, Limited Liability Companies & Partnerships, Income of Partners & Partnerships, General Overview, Contributions to Partnerships, State & Local Taxes, Income Taxes, Individuals, Estates & Trusts, Imposition of Tax, Corporations & Unincorporated Associations, Special Entities, Partnerships, Business & Corporate Law, General Partnerships, Formation, Federal Taxpayer Groups, Individuals, Credits, Compensation & Welfare Benefits, Tips, Wages & Other Compensation, Family Partnerships, Estate, Gift & Trust Law, Gifts, Personal Gifts, Gifts Causa Mortis, Estate & Gift Taxes, Management Duties & Liabilities, Fiduciary Duties, Duty of Good Faith & Loyalty