Alice Phelan Sullivan Corp. v. United States case brief

Alice Phelan Sullivan Corp. v. United States case brief summary
381 F.2d 399

SYNOPSIS:
The government filed a motion for summary judgment in an action by plaintiff corporation to recover an alleged overpayment in its income tax during a year that two parcels of realty were returned to plaintiff after they had been donated and claimed as a charitable contribution deduction.

OVERVIEW: The corporation brought action to recover an alleged overpayment in its income tax during a year that two parcels of realty were returned to the corporation, each of which it had previously donated and claimed as a charitable contribution deduction. The Commissioner of Internal Revenue disagreed with the corporation's characterization of the recovery as a non-taxable return of capital, viewing the transaction instead as giving rise to taxable income, and therefore adjusting the corporation's income by the total of the charitable contribution deductions previously claimed and allowed. The government filed a motion for summary judgment and the court granted the motion.

HOLDING:
-The court found that because the corporation obtained a full tax benefit from its earlier deductions, those deductions were properly classified as income upon recoupment and must have been taxed as such.
-Therefore, the court dismissed the corporation's petition.

ANALYSIS:
-The return of capital principle doesn't apply because APS got a benefit when they gave up the property.

OUTCOME: The court granted the government's motion for summary judgment in an action by the corporation to recover an alleged overpayment in its income tax during a year that two parcels of realty were returned to the corporation after they had been donated and claimed as a charitable contribution deduction. The court thereafter dismissed the corporation's petition.

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