*1 contributory disposition cause our
negligence not reach these need Moreover,
contentions. because of the im-
portance contributory negligence disposition this necessary
new trial There- on all issues.
fore, we reverse remand this matter new trial consistent with our Shirley
Paul D. DUNLAP and
Dunlap, Appellees,
Hawkeye Bancorporation, Appellee,
REVENUE, Appellant.
United States Court of
Submitted Dec.
Rehearing Denied March Murray,
John F. Farber, argued, Richard Cihlar, Division, Attys., Frank P. Tax Justice, Washington, D. Littlejohn, argued Baird, Kent O. Holm, McEachen, Hamann, Pedersen & Omaha, Neb., Judge, Circuit Senior BRIGHT, LARSON,* Circuit Judge, and Senior District BRIGHT,
This appeal by Commissioner ternal Revenue a determination by the tax court LARSON, designation. EARL R. Dis- Minnesota, sitting trict District of *2 786
Bancorporation
ductible lоss of
a
lowed the deduction
option did
proceedings in the tax court
exercisable
tained several consecutive
deficienciеs
lapsed option.
years
$35,000 in 1973 as a result of
Hawkeye’s
(Hawkeye)1 sustained
The Commissioner
subsequent to 1973. In
grounds
one-year
1973 federal
contesting the
options
disal-
a de-
re-
in-
Option
Number
[2]
[5]
[6]
[3]
[4]
[1]
July
July
July
July
July
July
July
July
July
Effective
Date
12,
12, 1972
12,
12,
12,
12,
12,
[1974]
[1975]
[1977]
[1973]
[1976]
July
July
July
July
July
July
July
July
July
Expiration
Date
11,
11,
11,
11,
11,
11,
11,
11,
[1973]
[1978]
[1975]
[1977]
[1979]
[1976]
[1974]
$2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
of
Amount
Refunds
280,000
210.000
105.000
245.000
140.000
175.000
35.000
70.000
Option
effect,
a
re-
forfeits
return,
Hawkeye,
see 26 U.S.C. §
come
to exercise the
year it fails
fund for each
option
had
ruled that the
v.
Dunlap
and allowed the loss deduction.
appeal
contends on
The Commissioner
1429-31
loss in 1973 with
Hawkeye incurred no
We reverse the
appeals.
The Commissioner
the Ste-
respect
option
to its
to
the tax cоurt.
decision of
because,
substance,
phens
single ten-year
created a
option agreement
Background.
I.
any
lapse in 1973 or at
oрtion that could not
ten-year
the end of the
time before
other
April
dispute. On
The facts are not in
that it contracted
Hawkeye asserts
period.
space in the
Hawkeye leased office
one-year
ten consecutive
for a series of
Moines, Iowa,
Stephens Building in Des
Stephens Building,
acquire the
options to
Industries,
July 12
Inc. On
Stephens
from
of the series
and that the first
contracted with
year, Hawkeye
of the same
Hawkeye to a loss
entitling
Stephens Industries for a series
$35,000.
deduction of
Building for
to
$2,000,000.
called for an
The contract
II. Discussion.
$350,000,
aggregate option price оf
divided
Revenue
the Internal
Section
op-
yearly
into ten
and successive
provides that
the loss attributable
Code
Hawkeye paid
tions.
aсcrues
the failure to exercise
they
Industries when
executed
option expires.2
when the
agreement.
agreement provided
Hawkeye may not
agree that
purchase option,
if
exercised
laps-
claim a loss deduction
it would receive a refund from
payment
the character of
es because
$35,-
representing
Industries in an amount
expenditures cannot
ordinary
capital
loss or
option according
unexpired
following
schedule:
property
9438-77,
has the same character as
1. This
Tax Court Petition
privilege
relates has
consolidated with five other rеlated cases for
or
trial,
purposes
(or
briefing,
taxpayer
After
have in
the hands of the
deficiency
acquired by
the tax court assessed
in tаx
if
the hands
against Hawkeye,
appealed
the Commissioner
him).
this and four
of the consolidated cases.
other
(b) Special
to failure
rule for loss attributable
parties subsequently
stipulation
a
entered
to exercise
dismissing
appeals in all but Petition 9438-
(a),
purposes
subsection
if loss
For
рrivilege
to failure to exercise
attributable
privilege
be
shall
(b)
1234(a)
Internal
§
exchanged on
been sold or
deemed to have
provided аs follows:
Revenue Code
day
expired.
(a)
gain
Treatment of
or loss.
1402(b)(l)(U)
by §§
This section was amended
to the sale or
Gain or loss attributable
1732, 1929;
Pub.L.94-455,
2136(a),
90 Stat.
of,
exchange
to failure to
or loss attributable
September
options granted after
effective
exercise,
privilege or
or sell
property
shall be considered
or loss
exchange
property
from the sale or
Dunlap
time.
FLOYD R.
be determined until that
dissenting.
supra,
ognize paid the amount for the Therefore, accept
income. I would
characterization transaction which bargained arms-length by for at judgment and affirm the of the tax
court. *4 McMILLAN,
ESTATE OF Jesse E.
deceased, Mary McMillan, E.
Executrix, Appellant,
REVENUE, Appellee.
United Court States Charles (argued) C. Owen Rose Law Submitted Nov. Firm, Association, a Professional Little Rock, Ark., John F. Murray, Bernstein, Robert Wil- Div., liam P. Wang (argued), Attys., Tax Justice, Washington, D. STEPHENSON, ROSS Cir HOWARD,* Judges, cuit District Judge.
ROSS, McMillan, Appеllant, Mary E. the Tax Court’s1 por- determination that a bequest tion to her under her late qualify husband’s will did not the mari- 2056(b) tal deduction under U.S.C. § (1976). McMillan v. (Jan. 1981). slip op.
No. For the herein, set forth reasons we affirm. Howard, Jr., George Irwin, The Honorable United The Honorable Lee H. Judge States District for the Eastern and West- Tax Court Arkansas, sitting by designa- ern Districts of tion.