Court Opinion

ID: 4486706
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:34:38.550349+00
Date Added: 2024-06-11T15:03:50.451276
License: Public Domain

Hamblen, C.J., concurring: I agree with the majority opinion refusing to impute a redemption under the circumstances presented. In my view, the disputed transaction, and the surrounding circumstances, are readily distinguishable from Zenz v. Quinlivan, 213 F.2d 914 (6th Cir. 1954). We should confine our analysis of the Durkins’ tax liability to the specific facts presented, not to what petitioner might otherwise have done. Commissioner v. National Alfalfa Dehydrating & Milling Co., 417 U.S. 134, 148-149 (1974). As articulated in National Alfalfa, we should be reluctant to: (1) Reject the established tax principle that a transaction is to be given its tax effect in accord with what actually occurred not in accord with what might have occurred, and (2) speculate about what might have happened at the time of the transaction had it not been structured as it was. Id. at 148. “This Court has observed repeatedly that, while a taxpayer is free to organize his affairs as he chooses, nevertheless, once having done so, he must accept the tax consequences of his choice, whether contemplated or not”. Id. at 149; see also Haley Bros. Construction Corp. v. Commissioner, 87 T.C. 498, 513 (1986); Groetzinger v. Commissioner, 87 T.C. 533, 541 (1986). The Durkins did not structure or report the transaction as a redemption. To hold that it was a Zenz type transaction could encourage attempts to manipulate bootstrap buyout transactions after the fact and countenance post-transaction tax planning. As suggested in National Alfalfa, careful and forthright tax planning of such transactions should be accomplished before they are carried out, not afterwards. Cohen, Jacobs, Wright, Parr, and Wells, JJ., agree with this concurring opinion.