Kenan v. Commissioner case
brief
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114 F.2d 217, 1940 U.S.
App. 40-2 U.S. Tax Cas. (CCH) P9635; 25 A.F.T.R. (P-H) 607
CASE SYNOPSIS: Petitioner
taxpayer, the trustee of a testamentary trust, appealed from an order
of the Board of Tax Appeals, finding that the distribution of
securities to the legatee of the trust resulted in capital gains
taxable to the petitioner under the Revenue Act of 1934, 26 U.S.C.S.
§ 117.
FACTS: Petitioner was the trustee of a testamentary trust that allowed petitioner to pay testator's niece $ 5,000,000 in both cash and securities from the trust estate. Respondent commissioner determined that the distribution of the securities to the niece resulted in capital gains which were taxable to the petitioner under the Revenue Act of 1934, 26 U.S.C.S. § 117. The board upheld the respondent's determination and petitioner appealed contending that the delivery of the securities of the trust estate was a donative disposition of the property and no gain was realized. On appeal, the court found that the bequest was not a donative disposition of specific property because the niece never had to chance that the securities might change in value by the time of the transfer. The property was an exchange and thus the capital gains were taxable.
CONCLUSION: The court affirmed the order.
FACTS: Petitioner was the trustee of a testamentary trust that allowed petitioner to pay testator's niece $ 5,000,000 in both cash and securities from the trust estate. Respondent commissioner determined that the distribution of the securities to the niece resulted in capital gains which were taxable to the petitioner under the Revenue Act of 1934, 26 U.S.C.S. § 117. The board upheld the respondent's determination and petitioner appealed contending that the delivery of the securities of the trust estate was a donative disposition of the property and no gain was realized. On appeal, the court found that the bequest was not a donative disposition of specific property because the niece never had to chance that the securities might change in value by the time of the transfer. The property was an exchange and thus the capital gains were taxable.
CONCLUSION: The court affirmed the order.
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