Court Opinion

ID: 9457051
Source: CourtListenerOpinion
Date Created: 2023-08-04 20:10:54.876892+00
Date Added: 2024-06-11T17:35:11.996809
License: Public Domain

DAVIS, Judge
(concurring in the result) :
I would follow Nielsen v. United States, 333 F.2d 615 (C.A. 6, 1964), affirming 212 F.Supp. 801 (M.D.Tenn. 1962), and dismiss the petition on the ground rejected by the trial commissioner — that taxpayer did not hold the Knights Life shares as capital assets but, rather, that the gain from the sale of the stock was ordinary income. Nielsen involved the very same transaction and a partner of the present plaintiff. I see no reason to disagree with the persuasive findings of the District Court, affirmed by the Sixth Circuit, that the taxpayer and his partners held the stock *1145for sale to their customer, American General, in the ordinary course of their brokerage business. They performed the services of a broker or middleman, acquiring the shares for American General and carrying through on the transaction so that the latter ultimately obtained the securities. Without their customer’s detailed written commitment, they would not have purchased the stock. The terms were all fixed or known in advance, including the profit. The whole arrangement strongly suggests the camouflaging of a brokerage business transaction by a thin veneer of investment-purpose. The participation of Smith, who was not a broker and may have had investment goals, did not change the character of the gain made by the Bradford Company partners, who were brokers and did not, in my view, have an investment purpose. Cf. Riddell v. Scales, 406 F.2d 210, 212-213 (C.A. 9, 1969); Tibbals v. United States 362 F.2d 266, 269, 176 Ct.Cl. 196, 203 (1966).
Since this ground — that the shares were not capital assets — is enough to dispose of the case, I do not consider whether, on the contrary assumption, the stock was held for more or less than six months.