*1 action because I would dismiss cutting away inventions, what was after represent on the
anticipated, advances for notice prior too small which are art laws, patent and would recogni2;ed by anyone the de- who tried experi- prior wanted to art and fects of correct- means of the obvious
ment with
ing them.
SKELTON, Judge, joins fore- dissenting opinion.
going
UNITED FREIGHT COMPANY STATES and Subsidiaries STATES.
The UNITED 138-66.
No. States Court Claims.
United
Feb. Washington, C., Haynes,
Walter D. D. attorney record, plaintiff. J. Mar- Haynes, Haynes Miller, vin N. Barr & Miller, Joseph Sheppard, D. H. Jerome Meeker, Washing- Bersch, and Robert S. ton, C.,D. of counsel. Washington, C.,
Joseph Kovner, D. Atty. with whom was Asst. Gen. Johnnie Walters, Philip R. M. for defendant. *2 freight Washington, operated by plaintiff. At Langer, the Ira M. Miller and forwarding terminals, less-than-carload C., of counsel. D. shipments are con- or less-than-truckload Judge, and COWEN, Chief Before truckloads. into carloads or solidated DAVIS, DURFEE, COL- LARAMORE, freight A of carload truckload NICHOLS, SKELTON, LINS, transported plaintiff’s thereafter Judges. long- freight forwarding by a terminal (or haul of common carrier succession OPINION* by carriers) plaintiff to common selected Judge: LARAMORE, by operated a destination terminal Federal recover consignees is an action This in of tiff the area where the States the United freight taxes income are At the destina- located. Company Freight and its subsidiaries terminal, freight tion unloaded I960; in- us year before The issue sorted, and it is then delivered to the for tax proper designated characterization consignees. volves The deliveries con- purposes of by plaintiff are effected either in its own by plaintiff1 dur- expended fees sultant operators trucks or other truck select- year The factual ing review. plaintiff. ed de- suit arises is in which this context “through concept lad- By tailed below. oper- plaintiff’s ing” had become basic Freight Company United States lading transpor- Through ations. corporation main- which is a Delaware freight consignment tation of a York principal in New office tains its lading, origin on bill of one to destination engaged City. in the business It is changes regardless form from one freight transportation furnishing serv- transportation in the course to another company’s includes business ices. transportation. In furtherance of such freight scope for- domestic within its July concept, plaintiff of this forwarding freight warding, foreign promotion development and initiated rental, cartage, ships, local truck aboard freight “piggy- of “containerized” freight operations. As warehouse freight backing.” Containerized findings fully in indicated more freight packed in a container which is Freight Company fact, the United States origin point and is standard size at the through subsidiary conducts its business point then moved to the destination operating corporations. In container, being un- without the same year present in the liti- is involved though may packed route even en gation, company utilized subsid- transpor- form of be a transfer from one iary corporations. operating Piggybacking is the tation to another. up pick Plaintiff utilizes its trucks to transportation of loaded truck trailers premises shippers. shipments freight at the on railroad flat- containerized shipment, In connection with each such cars. lading by plaintiff bill of is issued charged Historically, the railroads had shipper, and a common assumes separate products rates for the various responsibility delivery carrier’s for the carried, primarily on the value of based designated freight consignee to the products than on cost of rather shipper. result, transportation. As a premises shippers, long-haul years prior From to 1958 the shipments transported trucking industry are in di- succeeded freight forwarding verting transportation trucks to terminals truck from rail * “plaintiff” convenience, We are indebted to Trial Commissioner 1. For the term fact, findings Freight Mastín G. White for his Com the United States includes pany adopted entirety, which have been their and its subsidiaries. opinion, and for his recommended incorporated has been herein. portion years very prior 1960, plain- For transportation substantial several moving products unsuccessfully tiff persuade had tried valuable finished steamship companies “freight— set a commerce. rate, all kinds” similar one which July 1958, president, plaintiff had convinced the railroads convincing Forgash, Morris succeeded July set 1958. Plaintiff’s officers *3 “freight— single to set the railroads flag steamship asked American com- of for the rail service all rate kinds” including panies, Lines, Export American transporting truck trailers two 40-foot Inc., rate; to set such a and regardless flatcar, of on a containers Europe officers traveled to on several being products of carried value foreign flag steamship occasions to ask advantageous to This was inside. companies to set such rate. Plaintiff piggyback offering to tiff in its service steamship turned down all of the shippers. companies approached. which it in- there was substantial Having failed in its efforts to induce ship- in containerized crease steamship companies publish foreign ments to countries. Under “freight rate, plaintiff kinds” de- —all goods method, loaded in a container are attempt cided in would 1960 that point unit of size at an inland standard acquire Export control of American origin, they subsequently of and are de- Inc., Lines, for use its business. consignee in to the livered overseas Export American Lines was a domestic rehandling container, same no corporation engaged operation of platform delays. shipper The receives ocean-going transporta- vessels for lading. bill of The one container freight cargo, mail, passen- tion of and truck, rail, piggybacked ship. and gers. acquire Plaintiff desired control transporta- form one of Transfers company over this in order to establish a fully tion another are mechanized. “freight kinds” rate water trans- —all packing export of are also The costs portation, and in order to introduce Thus, eliminated. a substantial “through lading” service over routes saving in costs the conventional over Export Europe, American Lines to transportation of ocean method There Sea, the Mediterranean and the Middle saving is also a substantial in the time East. during course the trans- consumed informally had Plaintiff learned portation point origin between the and might possible be delivery. the final Bay Paul, Josephine Mrs. and from her associates, Up including year 1960, husband and their stock in to and Export charged steamship companies American Lines. separate Paul Mrs. 236,505 stock; products carried, owned rates shares Mr. for the various 5,300 stock; Paul primarily prod- owned shares of based value on the and a foundation certain ucts trusts con- rather than on the cost of the trans- portation. severally Thus, goods trolled and Mrs. Paul if Mr. even were 72,195 shipped owned total of shares inside sealed containers of stand- 314,000 size, steamship companies stock. re- ard shares of stock charged paragraph ferred upon to in this constituted rates based contents approximately percent of the outstand- This was disadvanta- containers. ing geous of stock plaintiff, shares issued American because its business “through Export freight foreign lading” Lines. Plaintiff had ascertained ownership very countries, it would remainder have been desir- very charge widespread; single the stock was able to able rate for large outstanding shipment there were no other of a container filled with stock; freight, upon blocks of Mr. and Mrs. based the cost of the trans- portation regard' Paul nominated the entire Board of had and without to the na- Export products of American Lines. Directors ture of the inside the container. $2,003.67 if it stood in the Plaintiff action. Plaintiff believed Mr. Gove Paul, place it could exer- Mrs his services. Mr. and Ex- over American cise the same control negotiations plaintiff between port exercis- Lines which been through Mr. Bachelor continued ing. February month of 1960 and into the 1960, plaintiff Early February Finally, by month be- March. means of a gan City negotiations plaintiff letter which in New York addressed to Mr. 314,000 respect acquiring the shares Paul Mrs. the date March Export they accepted re- Lines 1960 and which of stock American on the day, paragraph. parties preceding same ferred to entered into a con- whereby represented agreed tract Mr. and Mrs. Paul were the Pauls to sell Bachelor, negotiations their shares Robert W. of American plaintiff, and director of Lines stock to who was an officer *4 agreed rep- buy Export 241,805 Lines who had to the American and Pauls’ shares family up and in Paul to resented Mrs. and her additional shares from persons many designated years. by to be Pauls, business transactions for the all price per aat The letter $30 share. meeting plaintiff At the first between provided that the transaction Bachelor, plaintiff and Mr. asked Mr. specified place should be closed at a in Bachelor, plaintiff if could for he obtain City April New York not later than Export on American Lines the 1960, at which time for certificates the by stock owned and Mr. Mr. Mrs. Paul. shares of stock to were delivered replied Bachelor that the Pauls would plaintiff in for certified grant plaintiff option. never Mr. covering unpaid bank cashier’s cheeks the Bachelor further that in all the stated purchase price. pen- amount the business transactions which he had paragraph ultimate of the letter contract represented family, Paul Mrs. and her stated as follows: they option, had never entered into an enclose We our check certified for positive and he was the that Pauls would $500,000.00 payable Josephine Bay practice. not deviate from that Paul, applied to be on account of the negotiations, At Mr. the outset the purchase price of stock to be sold Bachelor it clear Mr. made and agree- hereunder, her and in case this offering Paul Mrs. were not their stock accepted by you ment is and we subse- sale, in American Lines for and quently performance default this proposal would consider a agreement, payment $500,- the said the form of an unsolicited offer from 000.00 is to be retained Paul as Mrs. plaintiff buy the stock. In this con- liquidated damages; and C. Michael nection, position Mr. Bachelor took the Paul, in consideration fore- the Paul Mrs. would con- Mr. hereby going, any rights waives and all any involving price sider offer a of less damages hereunder event we sub- share, than and that it would abe $30 sequently performance default plaintiff of time waste for to offer less agreement. this price than a share. The $30 $30 provision stock-purchase of the premium share reflected some above plaintiff contract under which made price then-current market for American payment $500,000 down in the amount of stock, Export Lines because Pauls’ agreed this sum was to be re- stock was control stock. liquidated tained Mrs. Paul as dam- ages During plaintiff negotiations if should default between performance Bachelor, of the contract was insisted plaintiff tiff and Mr. retained upon by Gove, management Bachelor Mr. when became Elmer and finan- G. apparent delay plaintiff there would be a be- consultant, cial advise signing respect management tween the of the con- date to certain and fi- closing parties aspects tract and the date. proposed nancial of the trans- language $500,000 used Mr. Bachelor wrote initial on provision, particular price liqui- of her stock as opinion. damages. previously quoted in He se- dated Plaintiff in- considered $500,000 figure stituting for $500,000, the down suit lected the to recover the possible dam- but concluded that dam- —and ages ages $500,000 approximately equaled wanted to make it as he —because possible plaintiff prove, certain would the Pauls could through go purchase of therefore decided that it would be stock. better not start lawsuit. In income tax for return signing After contract be- year 1960, plaintiff calendar claimed as was an- tween and the Pauls gross deductions income public, plaintiff began nounced $500,000 paid the sum of which had been very severe of the receive criticism to and retained Paul Mrs. in connec- stockholders, com- deal investment stock-purchase tion with the contract of panies, bankers, invest- investment 14, 1960, March $2,003.67 and the sum of ment counselors. This criticism was in- which had been to Elmer G. Gove Dow wire tensified after Jones management and financial advice 6,1960— April service carried an item on during negotiations. the contract days prior or 6 final fixed date closing transaction —to the Internal Revenue Service Will, presi- effect that Admiral John deficiency assessed tax in the amount *5 Lines, Export dent of American had is- $278,242.63 against plaintiff, of on the forecasting sued a statement unfavorable ground $500,000 that of amounts earnings operations and and the $2,003.67 preceding mentioned in the immediate future. paragraph represented in each instance capital ordinary “a loss and not an deduc- special meeting At a of deficiency, together tion.” The with in- April 12, 1960, Board of Directors on terest in the sum of $40,848.33, was proceed
was not to resolved ac- by plaintiff August 26, on 1963. any quisition of interest stock in Ameri- by plain- A claim for refund filed Export can Lines under the contract of 15, 1963; tiff on November the claim March 1960 with and Mrs. Mr. Paul. by was disallowed the Internal Revenue This decision was made because July present Service on 1964. by adverse criticism of the contract plaintiff May action was filed on parties, stockholders and other interested 3, 1966. and because of Admiral Will’s statement reflecting prospects unfavorable expenditures Plaintiff asserts that question fully American are Lines. deductible either as ordinary 165(a) losses under section 12, 1960, April On after the action the Internal Revenue Code as preceding paragraph mentioned necessary expenses business Directors, was taken Board responds, under section 162. Defendant plaintiff Paul that notified Mr. and Mrs. contrary, any to the deductible loss breaching it was the contract of March by plaintiff capital sustained ais loss 14, 1960. Pauls to Plaintiff asked the 165(f) section or section 1234. $500,000 payment return the down which plaintiff We hold that not limited to made, but refused capital treatment loss either of to do so. government upon sections relied and, therefore, plaintiff Pursuant to the contract is entitled to terms re- 14, 1960, dated cover. March Mrs. Paul retained 2. All sections hereinafter ence the Internal Revenue Code of citations to Code are, indicated, in refer- unless otherwise govern property, forfeiture must also I as dam- of a down general 165(a) provides as Section ages upon breach deductibility of respect to the rule with premise from purchase property. The losses that: proceeds is that defendant which as a deduction allowed shall be There buyer’s aon “makes if a loss no sense” during taxable any sustained loss purchase executory contract breached by in- compensated for year not property, views as defendant which or otherwise. surance completed lying option between an however, 165(f) imparts, Section capital purchase, loss. Be capital de- losses is the allowance question- may, as it and while we view as 1211(a) alia, by termined, inter section illogic imputes which defendant able the way that: limitation provides
which
treatment,
disparate
to such
tax
“what
corporation,
losses
aof
In the case
necessarily
makes
dic-
sense” does
exchanges
capital as-
sales or
tax
tate
definitive answer
the extent
allowed
area;
be
conceptual
sets shall
apparent
niceties often
exchanges.
gains from
sales
such
give way
must
to the hard realities
supplied.]
[Emphasis
statutory requirements.
urges
fail-
Defendant
pur-
property
In the instance where
stock-purchase con-
its
ure to exercise
resold,
can
no
chased and then
right
of the down
forfeiture
tract
and its
doubt that a sale in its
basic form
most
consti-
place.4
quite
has taken
dif-
And in the
capital
of a
tuted the sale or
pur-
ferent situation where an
Assuming
agree.
asset.
do not
We
having
property expires
chase
without
arguendo
rights pos-
bundle
exercised,
specific statutory pro-
been
executory
by plaintiff
sessed
under the
vision,
1234(a),5 supplies
section
comprised a
stock
necessary
exchange upon
sale or
asset,3
not,
capital
capital
asset was
depends.6
loss
treatment
But
view,
exchanged
in our
sold or
within the
*6
us,
the
now
where a
case
before
meaning of the statute.
purchase
unilaterally
property
to
is
buyer,
right
pur-
breached
the
the
to
argues
prin-
that
the same
Defendant
being thereby
govern
relinquished,
ciples
chase
the
of a
which
the character
buyer’s
purchase
to
loss on
down
is forfeited as
property,
purchase and
and on a
resale
damages,
perceive
exchange
we
no sale or
assump-
3. We consider the substance of our
property underlying
ture of the
the con-
purposes
argument,
that
tion for
a con-
the
tract and
context
in which its exists
right
purchase
to
what
be a
tract
would
determining
should
considered
capital
purchaser’s
right
asset
the
hands
whether
the contract
constitutes
a
asset,
capital
a
to be not
rea-
capital
itself
asset.
subject
sonable, but
the
of authorita-
also
applicability
1234(a)
5. The
of section
to
support.
See,
In-
tive
Commissioner of
the
in detail
case at hand is discussed
Ferrer,
F.2d 125
ternal Revenue
immediately
part
succeeding
the
of this
(2d
1962).
See also footnote
Cir.
opinion.
infra.
examples
particular
6.
code sec-
Other
necessary
regard,
supply
this
defendant contends
tions
the
which
sale or
exchange prerequisite
capital
character
loss
deter-
to
loss treat-
include,
alia,
following:
nature
loss
inter
of the
ment
mined
regard
166(d)
contract been
with
to a
of a non-
would have resulted
loss
§
taxpayer
corporate
consummated and the stock resold. This
worthlessness
debt;
will not
a
§
upon
contention
without merit. We
1232 with re-
nonbusiness
gard
assume to have
which the
the retirement
occurred that
to a loss realized
requires
corporate
fact, prerequisite
of certain
indebted-
statute
evidences
capital
say,
regard
;
loss
This is
to a loss from a
treatment.
ness
with
§
right by
particular
patent
however,
on
facts
con-
of a
where
other
a
transfer
right
exchanged,
or
tract
sold
the na-
“holder” thereof.
Turzillo-type
sense,
cisons
do we under-
and the
case is that
nor
in the traditional
statutory
provision
a
a
release for
sum
a
of his con-
a
seller
to be
stand there
right
(or
property
requirement.
tract
sell
satisfy
certain
performed),
have the contract
as com-
strongly urges
ra
Defendant
pared
itself,
property
sale
a
v. Com
decision in Turzillo
tionale of the
exchange
does not constitute the
or
sale
Revenue, 346 F.2d
of Internal
missioner
asset;
capital
of a
while the release for
(6th
1965)
our find
necessitates
Cir.
buyer
right
a sum
of his contract
ing
exchange
We are not
or
here.
sale
purchase
property
certain
does consti-
clearly
persuaded;
as
so
we view Turzillo
exchange
capital
tute the
sale
distinguishable
instant
case.
us,
Thus,
asset.
in the case before
if the
form,
Turzillo,
simplest
involved
in its
subject
Pauls had
not to
decided
sell the
right
possessed
pur
taxpayer
who
and, instead, paid
plain-
stock
a sum to
employer-corporation.
stock
his
chase
tiff
stock-purchase
for the release of his
agree
dismissal,
After
his
settlement
right,
essentially
we would have
taxpayer
whereby
ment
was reached
capital
the Turzillo case and its
treat-
right
stock-purchase
and re
released his
here,
ment
But where,
result.
as
$95,000.
sum
ceived therefor
buyer
(ac-
forfeits his down
taxpayer
court
held that
entitled
cepted by
the seller as
dam-
resulting
proceeds
gain
to treat
ages
performance) upon
in lieu of
breach
capital
from the
sale
thereby relinquishes,
in effect aban-
holding which,
concur in
asset. We
doning,
right
purchase,
his contract
recognizes
it,
as we view
the bilat
exchange.
there
been no
has
sale or
eral
transfer
consummated effec
tively
statutory
satisfied
sale
ex
asserts,
Defendant
reply
further
in its
change requirement.
Compare, Commis
brief,
that another well-settled line of
Ferrer,
sioner of Internal Revenue v.
typified by
decisions
Commissioner of
(2d
1962);
F.2d 125
Cir.
Commissioner
Paulson,
Internal Revenue v.
Golonsky,
Internal Revenue v.
(8th
1941),
requires
Cir.
(3d
1952),
denied,
F.2d 72
Cir.
cert.
tiff
be limited
loss treatment.7
U.S.
73 S.Ct.
to retain
history
rights.
legislative
reacquisition
of the build-
of section
cluded
moreover,
1234,
contains no indication
ing by
in satisfaction
the seller
Congress
constituted
bilateral
con-
intended
purchase-money indebtedness
therefore,
and,
operation
tracts to be
within
included
a sale
H.Rep.
to deduct
of the section.
No.
taxpayer
entitled
See
was
Sess.,
(1954);
Cong.,
payments
loss. See 83d
2d
an
A278-79
prior
as
S.Rep.
Sess.,
Cong.,
Commis-
No.
also,
&
83d
2d
Co. v.
C. L. Gransden
1941).
(6th
sioner,
437-38
Cir.
80
applicable to
is not
That section 1234
case, plaintiff
the instant
rights
indi-
further
is
contract
enjoyed
bilateral
indicia, nor
acquired
neither
v. Com-
DeWoskin
Morris R.
cated
benefits,
ownership
the burdens
Revenue,
T.C.
35
of Internal
missioner
viewWe
stock.
of the American
Court
(1960),
the Tax
wherein
executory
356
embryonic
breach
page
at
363:
stated
distinctly unlike the
contract here to be
so sub
contract
breach
Paulson
* *
*
point
out
must
[W]e
stantially performed
left the
as to have
options” in
“privileges or
section
security
more than a
seller with little
(2)
has refer-
1234]
section
(g)
[now
subject property. Accord
interest
in the
rights
uni-
possessed under a
ence
relinquish
ingly,
hold
we
contract,
Commis-
Lawler v.
lateral
right
stock-purchase
ment of
contract
its
Revenue,
F.2d
sioner
Internal
its forfeiture of the down
Inc.,
(C.A.
1935);
Drake,
A.W.
not constitute
did
(1944),
aff’d
F.2d
T.C.
thus,
exchange;
is not
a sale
(C.A. 10, 1944),
applicable
capital
loss
limited to
treatment of the
from failure
to losses that arise
which
sustained.
carry
There-
out
contracts.
bilateral
classify
to exercise
fore
failure
II
right existing
con-
a bilateral
117(g)
(2)
tract under section
[now
asserts,
alterna
Defendant
[Emphasis
incorrect.
section
1234]
tive,
loss was a
supplied.]
loss
under section 1234. Albeit there
important
also,
58-234,
an
distinction between
C.B.
1958-1
Rev.Rul.
See
many
option
a bilateral
contexts,
urges,
can be
defendant
stock-
There can
no doubt that the
purposes
no such
of sec
distinction
by plaintiff
right
possessed
so,
tion
con
1234. This is
defendant
right,
and not
a bilateral
tinues,
both
because
have
same
quot-
privilege.
This court has
position
economic
effect. Defendant’s
approval
definition in 1 S.
ed with
not well taken.
Williston, Contracts,
p.
61A
at
§
1234(a) provides,
pertinent
Section
(3d
1957),
option as “the obli-
of an
ed.
part, that:
gation
to sell
one binds himself
* * *
attributable to fail-
[L]oss
discretionary
leaves
*8
* *
privilege
option
ure to
a
exercise
or
to
buy
Dynamics
party
*.”
to
other
buy
property
or sell
consid-
shall be
States,
Corporation
United
of America v.
* * *
or
ered
loss from the sale
424,
74, 389 F.2d
431
62,
182 Ct.Cl.
* *
property
*.
[Em-
(1968).
Supreme
stated
The
Court has
phasis supplied.]
given
option
privilege
“[a]n
buy
property
to another to
section,
ambiguity,
the owner
apparent
This
no
with
property
supplies
his election.” Western
exchange require-
at
the
the sale or
Brown,
Telegraph
U.S.
expressly
Co.
253
ment
v.
respect
Union
to transac-
460,
101, 110,
895
14,
agreement
(1959).
Similarly,
1960 be-
of March
in Binns
United
v.
plaintiff
States,
F.Supp.
(M.D.Tenn.,
the Pauls and the
was
tween
254
889
option,
, aff’d,
1966)
(6th
defined
as that
term is
not an
385 F.2d
Cir.
159
though
preceding paragraph,
1967) ,
it
because
the
the
contract
did
therein
plaintiff
discretionary
liquidated damages pro-
with the
not contain
not
was
agreement
vision,
respect
as
whether
to
court held
to
for-
purchase
liqui-
would not elect to
feiture of the down
would
as
damages
contrary,
plaintiff
upon
un-
To the
dated
breach
stock.
that:
*
obligated
purchase
* *
equivocally
itself
to
controversy
item in
[T]he
stock,
314,000
up
in the
to
shares
payment]
forfeited down
was
[the
following language:
lapsed option
for a
but
purchase
hereby agree
damages
to
2. We
in lieu
for
forfeiture
**
*
you
from
to
[the Pauls]
failure
consummate a contract of
*
**
241,805
you
F.Supp.
owned
shares
254
at 891.
sale.
Closing
agree
to
we
on the
Date
presence
liquidated
That the
of a
dam-
purchase up to
shares
additional
ages provision does not convert a bilater-
persons
des-
to be
of said Stock
buy
option
al
and sell contract
into an
by you
ignated
on or before
is further
confirmed
an examination
* *
*
Closing
pur-
Date. All such
rights
of the dissimilar
and liabilities
per
price
shall be at a
of $30.00
chases
option
incident
to each. The holder of an
* * *.
share
buy
truly
has the
alternative
choice of
exercising
also clear that
the insertion of
option,
allowing
It is
it to
damages
lapse. See,
provision
liquidated
in the
States,
Fletcher v. United
plaintiffs
(N.D.Ind.1969).
not con-
breach did
event
24 AFTR2d
If
69-5235
option.
option
exercised,
vert the bilateral contract
into
an
amount
recognized
early
principle
option
This
for the
forfeited and
Co.,
Exchange Bldg.
Thompson
optionor
only,
157
v.
is entitled to
amount
693
optionee
obligated
Tenn.
A.L.R.
S.W.2d
as the
was not
(1928),
perform.
purchaser
wherein it was held:
in a bilateral
* *
*
liquidated damages pro-
contract with a
mere
[T]he
fact
however,
vision,
perform,
if he
fails
provides
liquidated
contract
dam-
damages,
full
is liable for
contract
ages does not
convert
the contract
being
liquidated contract amount
meas-
but,
option,
into an
absence
sale
only
ure thereof
the extent
provision
contrary, merely
generally,
reasonably
See
so related.
gives
enforcing
seller
choice of
Foulger,
264 P.
Thomas
Utah
v.
rights against
purchaser,
his full
Weatherproof
Improvement
(1928);
claiming
stipulated
the amount
Contracting
Kramer,
Corp.
Misc.2d
v.
damages.
omit-
[Citations
The com-
172 N.Y.S.2d
tiff
884
346 F.2d
during negotiation
taxpayer-buyer
financial advice
received
which the
who
Defendant money
now under review.
trans
settlement of an aborted
payment,
position
this
action, comparable
have
takes
the one we
expense
trans
asset
here,
of a
“as
held to have made a “sale
was
As
character.”
capi
action,
exchange”
the same
entitled
therefore
however,
holding,
gain
group
our
a result
tal
treatment.1 The other
capi
of a
by plaintiff,
was no
hold
decisions, put
sale
there
forward
urged
case,
position
receipt
in this
tal asset
that the
pur
consultation
foundation.
is without
a seller for breach of
contract to
fully
question
property
deductible
does not
fee
gross
chase
or other
stock
ordinary
income,
therefore,
exchange”
result
a “sale or
holding
53,
654;
the forfeiture
In view of our
99 L.Ed.
75
Commis
S.Ct.
by plaintiff
Ray,
is deductible
loss sustained
Revenue
210
sioner
Internal
v.
165(a),
denied,
(C.A.5, 1954),
section
we need
decide
under
F.2d 390
cert.
alternative,
deductible,
654;
829,
53,
it is
whether
348
S.Ct.
99 L.Ed.
75
U.S.
necessary
Metropolitan Bldg.
business
ns an
Co.
Commissioner
v.
expense
Revenue,
(C.A.9,
162. We note
section
282
Internal
F.2d 592
passing,
although plaintiff’s
however,
1960)
Corp.
;
Tomlin
Bisbee-Baldwin
v.
expenditure
prompted,
son,
929,
(C.A.5,
at
least
320 F.2d
935-936
implement
part,
;
States,
1963)
its
certain
desire
v.
296
Dorman
United
policies,
(C.A.9, 1961).
rate
evidence
is substantial
also
F.2d
puts
Defendant
27
expenditure
indicating
general category
was also
same
such
capital-loss
investment-motivated.
In
cases as
Commissioner
Paulson,
255
ternal Revenue v.
123 F.2d
1941) ;
(C.A.8,
eases
the defendant
in this
1. Other
cited
Kaufman v Commissioner
(C.A.
Revenue,
connection are: Commissioner of Internal
F.2d 901
Internal
Ferrer,
(C.A.2,
9, 1941) ;
Revenue v.
304 F.2d
C. L. Gransden
Co. v. Com
&
1962) ;
Revenue,
Internal Rev
Commissioner
missioner of Internal
Golonsky,
(C.A.3,
1941)
(C.A.6,
;
v.
897 ordinary Paper Corp. States, must therefore treated as United v. 163 Ct.Cl. 537-539, 730, (1963) ; income.2 738 States, F.Supp. Stoddard v. United 49 opinion, opting for court’s Congress (D.Mass.1943). 641, 644 When distinguishes rule, latter the TurziUo artificial, one-sided, possibly desires an by saying that in those line cases reading exchange”, pro it “sale so parties it two agreement contract settled 1234(a) (loss (b) vides as in Section breach, here after the while priv attributable ilege to failure to exercise liquidated damage provision in- option). is, cluded in the contract This itself. Thus, my proper view that resolu- me, unsatisfactory. most cannot I requires tion this case us to choose any difference, it see that make should divergent groups prece- between the 1211(a) 165(f) purposes, § § dents, harmony to find in them a uncompleted sides whether two to an yet discerned, has been discover compromise separate transaction it principle but new ex- sound “sale or arrangement rupture after the or wheth- change”, concept or to skirt that entire- er, having foresight, do in- it ly disposing of matter. me For cluding damages provision digging much more is called for. I original in their contract. other now, I know that do not have the answer words, purpose is no tax or other useful circumstances is better declaring taxpayer served this my disagreement simply to record has an loss because it approach which commends itself to $500,000 damages majority. agreement original Pauls under buy-and-sell, that it but would have $500,000 loss if the had been
paid under a settlement reached after through go pur-
the refusal
chase. other
No valid distinction has been 57 CCPA suggested yet or has as occurred me. Application Lynn B. WAKEFIELD and argues The Government can Frederick C. Foster. exchange” breaching be a “sale or buyer for the Appeal Patent No. 8192. type this transaction but United States Court of Customs for the seller receives who Appeals. and Patent keeps property. opinion his The court’s March 1970. view, leans toward but to me Rehearing As Modifiedon Denial of concept unacceptable. seems aof May 21, 1970. exchange” necessarily requires “sale participation, two-sided and I cannot see
how a ex- transaction can be “sale or
change” something for the one and else Bag-Camp
for the
See
other.
Union
Taxpayer
Myers
Johnson
cites
v. Commissioner
v. Commissioner of Internal Rev
Revenue,
enue,
(1959),
Internal
32 B.T.A.
156