Court Opinion

ID: 4480970
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:37.594757+00
Date Added: 2024-06-11T15:03:36.015936
License: Public Domain

Withev, J., concurring: I concur in the result reached by the majority in this case but cannot agree that assignment of Ovid’s evidences of indebtedness to the taxpayer-petitioners as distinguished from Birmingham Steel can be construed as a contribution to the capital of the latter. It seems to me a necessary conclusion that this result must be arrived at on the basis of the fact that the evidences of indebtedness both in the hands of Ovid and in the hands of petitioners would constitute valid and subsisting evidences of indebtedness. That contrary to the situation where Ovid had made an investment (loan) in the notes, petitioners made no investment whatsoever. (To find other than that the $75,000 purchase price was paid solely for the physical assets of Birmingham flies in the face of this entire record.) Therefore it seems to me that although the evidences of indebtedness represented real debt by Birmingham, they were without investment consideration and therefore were not capital assets in the hands of petitioners and were not intended to be covered by section 1232 of the Code which requires as a preliminary to its application that such evidences of indebtedness be “capital assets in the hands of the taxpayer.” Commissioner v. Gillette Motor Transport, Inc., 364 U.S. 130; Holt v. Commissioner, 303 F. 2d 687 (C.A. 9); Ralph Bellamy, 43 T.C. 487; Jackson Hill, 47 T.C. 613. These payments seem to me to be ordinary taxable gain in their entirety.