Court Opinion

ID: 4476956
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:17.166597+00
Date Added: 2024-06-11T15:03:27.956583
License: Public Domain

Arundell, J., dissenting: There is no dispute that the oil payments constituted ordinary income and if they had been collected by the taxpayer they would have been taxable to him. But, petitioner assigned his right to collect these oil payments to the extent of $120,000 to a builder in consideration of the latter’s erecting a house for petitioner. In the terms of the assignment the oil payments were transferred to the builder until the latter “shall have received from the proceeds of the sale of said interest in said oil the sum of One Hundred Twenty Thousand ($120,000.00) Dollars, whereupon the interest herein conveyed to said A. E. Hinman [builder] shall terminate and revert to and revest in said John David I-Iawn [petitioner], his heirs, representatives and assigns without the necessity of the execution of any character of release or reconveyance.” Approximately 2 years were estimated to pay out the builder for erecting petitioner’s house. It can no longer be successfully argued that one vested with the right to receive income can “escape the tax by any kind of anticipatory arrangement, however skillfully devised, by which he procures payment of it to another, since, by the exercise of his power to command the income, he enjoys the benefit of the income on which the tax is laid.” Harrison v. Schaffner, 312 U. S. 579. See Lucas v. Earl, 281 U. S. 111; Helvering v. Horst, 311 U. S. 112; Helvervng v. Eubank, 311 U. S. 122. The majority seem to think there is a different treatment called for when income from an oil well is assigned and that the assignment of such income constitutes an assignment of a property interest in the corpus from which flows the income assigned even though the amount assigned is limited and is temporary in nature. It is true the Supreme Court has held where the entire interest in the income of a trust was disposed of that the transaction may be regarded as a transfer of the corpus from which flowed the income. Blair v. Commissioner, 300 U. S. 5. But, this has not been the Court’s holding where there has been a temporary disposition of the income from property even though the transfer takes the form of a temporary disposition of the property itself. Harrison v. Schaffner, supra. In all such cases the income has been taxed to the grantor. In my opinion the oil payments constituted ordinary income to petitioner and should be taxed accordingly. Kern, Opper, Raum, Rice, and Bruce, JJ., agree with this dissent.