Court Opinion

ID: 9454842
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:01:02.779056+00
Date Added: 2024-06-11T17:34:20.320223
License: Public Domain

HOLLOWAY, Circuit Judge
(dissenting):
I respectfully dissent. To me the decision of the Tax Court is based, as it states, on an ultimate finding of fact. The finding was that although the notes constituted valid outstanding indebtedness in the hands of Mr. Birmingham, they “ * * * did not retain such character when purchased by petitioners.” 50 T.C. at 226. The question whether the transaction resulted in the notes’ representing equity investment or corporate debt is one “ * * * leading to findings of ultimate fact.” Covey Investment Co. v. United States, 377 F. 2d 403 (10th Cir. 1967); see also McSorley’s, Inc. v. United States, 323 F.2d 900 (10th Cir. 1963); Diamond Bros. Co. v. Commissioner, 322 F.2d 725 (3d *584Cir. 1963); and Jewell Ridge Coal Corp. v. Commissioner, 318 F.2d 695 (4th Cir. 1963).
The majority opinion and that of the Tax Court state the facts in detail. The Tax Court found that the notes constituted bona fide debt in the hands of Mr. Birmingham. However, the petitioners set out to invest $75,000 to obtain the property. This was attempted by an offer in that amount for the stock alone after some examination of the books. As first drawn the letter of intent showed that the petitioners did not then contemplate obtaining assignment of the notes, whose existence was unknown. And the entire purchase price — which remained the same in the final agreement — was only a portion of the face amount of the notes. While the majority opinion here persuasively points to facts supporting its view, the ultimate finding of fact by the Tax Court on the entire record was not clearly erroneous. To me the case is one that does turn on a fact question and one where we cannot say that the Tax Court finding was clearly erroneous. In such circumstances the finding is binding. 26 U.S.C.A. § 7482(a); Commissioner v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1960). For these reasons I would not disturb the decision of the Tax Court.