Court Opinion

ID: 9448833
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:45:43.288536+00
Date Added: 2024-06-11T17:31:33.852583
License: Public Domain

RIVES, Circuit Judge
(concurring in part and dissenting in part):
I concur as to the item of $8,000.00 paid to the Realty Company.
It seems to me, however, that a substantial part of the $121,841.11 paid to the Mortgage Company was for the right to receive service fees for the remaining years of the outstanding loans. To that extent the Mortgage Company was simply converting future income into present income. Commissioner v. P. G. Lake, Inc., 1958, 356 U.S. 260, 267, 78 S.Ct. 691, 2 L.Ed.2d 743.
The sale of “all of the rights, title, obligations and benefits pertaining to the servicing contract,” like the sale of any going business, should, I think, be com-minuted into its fragments and the “purchase price” should be allocated among the various assets sold. Williams v. McGowan, 2d Cir., 1945, 152 F.2d 570, 572;1 C. I. R. v. Chatsworth Stations, Inc., 2d Cir., 1960, 282 F.2d 132, 135. I would agree that a part of the $121,-841.11 represented the purchase price of capital assets.
It seems to me that the case should be remanded to the Tax Court so that it might allocate the amount according to the realities of the transaction. Then, the part allocated to the right to receive service fees should be taxable as ordinary income and the remainder should be taxable as long-term capital gain, I therefore concur in part and respectfully dissent in part.

. See the reference to and oblique approval of that case in Watson v. Commissioner, 1953, 345 U.S. 544, 552, 73 S.Ct. 848, 97 L.Ed. 1232.