Court Opinion

ID: 4484107
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:16:31.090094+00
Date Added: 2024-06-11T15:03:40.806661
License: Public Domain

Tannenwald, J., dissenting: In the instant case, there was a change of employer (from OWJ to Meisel/ Donnelly) and a change in ownership of the business through the sale by OWJ of substantially all of its assets to Donnelley. In my opinion, these factors are sufficient to enable the petitioner to obtain capital gains treatment under section 402(a)(2); I do not agree with the majority that the phrase “separation from the service” requires a substantial change in the makeup of the employee group. My reasons for this position are set forth in my concurring opinion in Gittens v. Commissioner, 49 T.C. 419, 427-430 (1968). Nothing has developed since that time to cause me to change my views. Indeed, my rationale has been adopted in Smith v. United States, 460 F.2d 1005 (6th Cir. 1972). Although there was a change of corporate employer in United States v. Haggart, 410 F.2d 449 (8th Cir. 1969), cited by the majority, both the transferor and transferee corporations had common ownership (see 410 F.2d at 450), and that case is distinguishable. With respect to United States v. Johnson, 331 F.2d 943 (5th Cir. 1964), as I pointed out in my concurring opinion in Gittens (see 49 T.C. at 429), the taxpayer remained an employee of the same entity after the transfer of ownership; in fact, he was such an employee at the time the distribution to him was made.1 That case is therefore distinguishable on its facts. Consequently, although the rationale of the Fifth Circuit Court of Appeals (to which an appeal herein would lie) is broad and consistent with that of the majority opinion herein, I do not consider that the rule of Golsen v. Commissioner, 54 T.C. 742 (1970), affd. on other issues 445 F.2d 985 (10th Cir. 1971), is applicable.  See also United States v. Martin, 337 F.2d 171 (8th Cir. 1964), involving the taxability of distributions to another participant in the same plan as was involved in Johnson.