Court Opinion

ID: 4616068
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:33:41.967332+00
Date Added: 2024-06-11T07:59:41.277347
License: Public Domain

JONAS BLOOM, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.  JONAS BLOOM, EXECUTOR, ESTATE OF DAVID BLOOM, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Bloom v. CommissionerDocket Nos. 35159, 35160.United States Board of Tax Appeals20 B.T.A. 933; 1930 BTA LEXIS 2004; September 23, 1930, Promulgated *2004  The amount of $228,362.82 paid in 1925 to one Benjamin Bloom by the partnership of David Bloom & Co. held to be Benjamin Bloom's distributive share of the partnership assets and not a gift to him from the petitioner, Jonas Bloom, and David Bloom, deceased.  Herman Phleger, Esq., for the petitioner.  John E. Marshall, Esq., and Frank T. Horner, Esq., for the respondent.  MARQUETTE *933  These proceedings, which were duly consolidated for hearing and decision, are for the redetermination of deficiencies in gift taxes asserted by the respondent against Jonas Bloom and the estate of David Bloom in the amounts of $783.63 and $1,783.63, respectively.  FINDINGS OF FACT.  The petitioner Jonas Bloom is an individual residing at San Francisco, Calif.  He is and has been since October 8, 1925, the duly appointed, qualified and acting executor of the estate of David Bloom, who died September, 1925.  The petitioner, Jonas Bloom, and David Bloom, now deceased, were brothers.  About 1891 or 1892 the said Jonas Bloom and David Bloom formed a partnership to engage in the mercantile business in the Republic *934  of San Salvador.  They employed*2005  their nephew Benjamin Bloom in the business, giving him for his services 20 per cent of the net profits.  This arrangement continued until about January, 1905, at which time the partnership was reorganized under the name of David Bloom & Co., Jonas Bloom, David Bloom, and Benjamin Bloom each having a one-third interest therein.  The capital contribution of Benjamin Bloom consisted of a portion of his 20 per cent interest in the net profits of the former partnership of Jonas and David Bloom, which he had permitted to accumulate and remain in the business.  David Bloom and Benjamin Bloom were resident partners in the new partnership.  The partnership of David Bloom & Co. continued until the latter part of 1924 or early in 1925, when it was dissolved.  At that time its assets consisted of one-half of the capital stock of the Banco Occidental of San Salvador and at least $685,088.46 in money.  Upon the distribution of the assets of the partnership in 1925, Jonas Bloom, David Bloom, and Benjamin Bloom each received one-third of said bank stock owned by the firm, together with $228,362.82 in cash.  The respondent determined that the said amount of $228,362.82 received by Benjamin Bloom*2006  represented gifts made to him by his uncles, Jonas Bloom and David Bloom, in the amounts of $114,181.41 each, and he has accordingly asserted a gift tax against Jonas Bloom and the estate of David Bloom, as above set forth.  OPINION.  MARQUETTE: The issues raised herein must be resolved in favor of the petitioner.  The evidence establishes to our satisfaction that Benjamin Bloom was a partner in the firm of David Bloom & Co., and that the amount of $228,362.82 received by him upon the dissolution of the firm was his distributive share in the firm assets and not a gift from his uncles, Jonas Bloom and David Bloom, or either of them.  It follows that the respondent erred in asserting against Jonas Bloom and David Bloom the taxes in controversy.  Judgment will be entered for the petitioner.