Court Opinion

ID: 4482475
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:15:30.749709+00
Date Added: 2024-06-11T15:03:44.440867
License: Public Domain

Goefe, J., concurring: I concur both in the result reached by the majority and in the line of reasoning employed to reach that result. In addition, I would hold for respondent on the grounds that the advances to Las Delicias do not constitute transactions entered into for profit under the provisions of section 165 (c) (2). I find no authority for the proposition that the acquisition of corporate stock, per se, constitutes a transaction entered into for profit and I conclude that the rule must be that it is not such a transaction. The profit hoped to be derived is either dividend income or gain from the subsequent sale or other disposition of the stock. The payment of dividends is another transaction as would be the subsequent sale or other disposition of the stock. Petitioners could not hope to reap any profits by making the advances to Las Delicias. They could only reap the reward of being a stockholder if all of the required conditions transpired. Obviously this characterized the advances as capital in nature. Petitioners do not contend that the advances are deductible as bad debts. In Charles T. Parker, 1 T.C. 709 (1943), the advances by the taxpayer were for the purpose of sharing in a mining venture and we held that this was a transaction entered into for profit. The issue in Harris W. Seed, 52 T.C. 880 (1969), was whether the taxpayers’ expenditures represented the cost of investigating a business opportunity or, because of the point at which the venture had progressed, represented a transaction entered into for profit. The parties in that case stipulated that the expenditures were for the purpose of thereafter realizing a profit. I conclude, therefore, that Harris W. Seed, mpm, does not stand for the proposition that expenditures in promoting a business venture whereby the venturer will receive only corporate stock represent entering into a transaction for profit. I, therefore, concur in order to reflect my view that no concession should be made in the instant case that petitioners had entered into a transaction for profit under the provisions of section 165(c)(2).