Court Opinion

ID: 9454370
Source: CourtListenerOpinion
Date Created: 2023-08-04 18:44:47.138628+00
Date Added: 2024-06-11T17:34:05.672778
License: Public Domain

COFFIN, Circuit Judge
(concurring).
I concur in the result reached by the court’s opinion concerning the transfer of the “racing interests”; however, I would have reached that result in a slightly different fashion.
As I understand the law in this area, the first question is whether the “racing interest” was income-producing property or merely income. If it was the former, the taxpayer would prevail whether or not the consideration was adequate, Blair v. Commissioner of Internal Revenue, 300 U.S. 5, 57 S.Ct. 330, 81 L.Ed. 465 (1937). Of course, if the consideration was not adequate, the taxpayer would be subject to a gift tax — but that is not before us. If the “racing interest” was income, then we reach the question of adequacy of consideration. If it was adequate, the taxpayer has paid his proper due to the government, Rhodes Estate v. Commissioner of Internal Revenue, 131 F.2d 50 (6th Cir. 1942); if not, the government is entitled to retain the taxes paid under protest on the actual winnings.
I agree that the “racing interests” were not income-producing property. I do not believe, however, that this conclusion is in any way related to the adequacy of consideration. Rather, I think that it is not income-producing property because there is lacking, as a practical matter, even the rights to enforce a trust which inhere in its beneficiaries. See Blair, supra. Indeed, the facts of this case are most analogous to the gift of bond coupons in Helvering v. Horst, supra, i. e., a transfer only of income.
This being so, I agree with the court’s finding that the consideration was inadequate, and that, therefore, the taxpayer is liable for the tax on the income from the “racing interests”.