Gammill v. Comm'r of Internal Revenue, Docket Nos. 1841-70
| Decision Date | 13 August 1974 |
| Docket Number | 1844-70,Docket Nos. 1841-70,6024-72. |
| Citation | 62 T.C. 607 |
| Parties | STEWART GAMMILL III AND LYNN C. GAMMILL, ET AL.,1 PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Paul M. Newton, for the petitioners.
Rule 121, Tax Court Rules of Practice and Procedure.—Respondent moved for summary judgment on the ground that petitioners were collaterally estopped from litigating respondent's determination of deficiencies for the taxable years 1964 through 1969. Held: Respondent's motions will be granted because petitioners are collaterally estopped by a prior judgment from litigating the same issues decided for prior taxable years. There has been no change in legal climate and no change in the controlling facts subsequent to the prior judgment.
Respondent determined the following deficiencies in the petitioners' Federal income taxes:
At issue is whether under Rule 121, Tax Court Rules of Practice and Procedure, respondent's motions for summary judgment should be granted because petitioners are collaterally estopped by a prior judgment from asserting that they realized capital gain, rather than ordinary income, from certain timber contract proceeds they received during the years in question.
Most of the facts were stipulated by the parties. The stipulation of facts and exhibits attached thereto are incorporated herein by this reference.
Stewart Gammill III and Lynn Crosby Gammill, husband and wife, are individuals who were legal residents of Picayune, Miss., at the time the petition in docket No. 1841-70 was filed with this Court and who were residents of Hattiesburg, Miss., at the time the petition in Docket No. 6024-72 was filed herein.
Stewart Gammill III and Lynn C. Gammill jointly filed their Federal income tax returns for the taxable years 1965 and 1966 with the district director of internal revenue, Jackson, Miss., and for the years 1967, 1968, and 1969 with the Internal Revenue Service Center, Chamblee, Ga.
L. O. Crosby III and Marjorie Y. Crosby, husband and wife, are individuals who were legal residents of San Carlos, Calif., at the time the petition in docket No. 1844-70 was filed with this Court.
L. O. Crosby III and Marjorie Y. Crosby jointly filed their Federal income tax returns for the taxable years 1965 and 1966 with the district director of internal revenue at Jackson, Miss.
Of the amounts received by Stewart Gammill III from the sale of pulpwood (tree tops and limbs lying on the ground after the trees were felled), the amounts indicated for the taxable years below represent long-term capital gain income:
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¦ ¦Long-term capital ¦
+--------------+-------------------¦
¦Taxable year ¦gain income ¦
+--------------+-------------------¦
¦ ¦ ¦
+--------------+-------------------¦
¦1966 ¦$1,313.36 ¦
+--------------+-------------------¦
¦1967 ¦3,459.22 ¦
+--------------+-------------------¦
¦1968 ¦10,307.51 ¦
+--------------+-------------------¦
¦1969 ¦4,021.65 ¦
+----------------------------------+
$3,243.88 received by petitioners Stewart Gammill III and Lynn Crosby Gammill in the taxable year 1969 for ‘timber stumpage sales' resulted in long-term capital gain income. Lynn Crosby Gammill realized long-term capital gain of $2,661.47 during the taxable year 1969 from the sale of 100 shares of stock of Firestone Tire & Rubber Co.
Effective as of July 2, 1960, Lynn Crosby Gammill, who was then Dorothy Lynn Crosby, together with L. O. Crosby, Jr., acting as trustee of the Dorothy Lynn Crosby Trust, and together with L. O. Crosby, Jr., Dorothy H. Crosby, and L. O. Crosby, Jr., as trustee of the L. O. Crosby III Trust, and St. Regis Paper Co., a New York corporation, entered into two timber purchase agreements and two leases relating to approximately 110,000 acres of land situated and located in Hancock, Pearl River, Harrison, Lamar, Forrest, Walthall, and Marion Counties, Miss., and to approximately 2,120 acres of land located and situated in St. Tammany Parish, La., together with all timber growing and to be grown thereon, which were owned by such individuals and trusts on said date, and which had been acquired by them on September 28, 1959, and owned by them for more than 6 months prior to July 2, 1960.
The timber purchase agreements and leases were for terms commencing as of July 2, 1960, and expiring on December 31, 2019.
The Dorothy Lynn Crosby Trust terminated on May 29, 1961, and upon its termination all of the property included therein was distributed to Lynn Crosby Gammill as its beneficiary. The L. O. Crosby III Trust was terminated on June 22, 1964, and upon its termination all of the property included therein was distributed to L. O. Crosby III, as its beneficiary.
During 1965 and 1966, L. O. Crosby III and Lynn Crosby Gammill received payments in consideration for right-of-ways, easements, severance damages, and in some instances the sales of property, which resulted in gain or losses for the taxable years 1965 and 1966, in the amounts and character indicated by the following schedules:
The following amounts of gain realized by petitioners from the July 2, 1960, timber purchase agreements entered into with St. Regis Paper Co. are in controversy (petitioners contending that such amounts are long-term capital gain, and respondent contending that such amounts are ordinary income):
+-----------------------------------------------+
¦ ¦Lynn Crosby ¦ ¦
+--------------+-------------+------------------¦
¦Taxable year ¦Gammill ¦L. O. Crosby III ¦
+--------------+-------------+------------------¦
¦ ¦ ¦ ¦
+--------------+-------------+------------------¦
¦1964 ¦$44,848.00 ¦ ¦
+--------------+-------------+------------------¦
¦1965 ¦44,855.04 ¦$89,710.90 ¦
+--------------+-------------+------------------¦
¦1966 ¦46,408.90 ¦92,817.80 ¦
+--------------+-------------+------------------¦
¦1967 ¦50,577.06 ¦ ¦
+--------------+-------------+------------------¦
¦1968 ¦47,381.62 ¦ ¦
+--------------+-------------+------------------¦
¦1969 ¦49,903.75 ¦ ¦
+-----------------------------------------------+
For the taxable years 1961, 1962, and 1963, respondent determined that payments to petitioners Lynn Crosby Gammill, L. O. Crosby III, and related parties, under the same July 2, 1960, timber purchase agreements entered into with St. Regis Paper Co. should be taxed as ordinary income rather than capital gain under section 631(b), 1221, or 1231 of the Internal Revenue Code of 1954. 2
As a result of such determinations, petitioners Lynn Crosby Gammill and L. O. Crosby III paid the tax, satisfied all jurisdictional requirements, and with their respective spouses3 and related parties brought actions in the United States District Court of the Southern District of Mississippi, Southern Division, to recover such taxes on the basis that the amounts received from the St. Regis Paper Co, under the July 2, 1960, timber purchase agreements should be taxed as capital gain under section 631, 1221, or 1231.
The United States District Court for the Southern District of Mississippi, having consolidated the cases for trial, decided that the amounts paid Lynn Crosby Gammill, L. O. Crosby III, and related parties during their taxable years 1961, 1962, and 1963 by the St. Regis Paper Co. pursuant to the July 2, 1960, timber purchase agreements were taxable as ordinary income and were not long-term capital gains under Code section 631(b), 1221, or 1231. This unpublished decision appears at 22 A.F.T.R. 2d 5554 (1968).
The United States Court of Appeals for the Fifth Circuit affirmed the judgment of the United States District Court for the Southern District of Mississippi in Crosby v. United States, 414 F.2d 822 (C.A. 5, 1969).
Pertinent portions of the judicial record show that the following persons were parties in those cases:
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¦L. O. CROSBY, JR. and DOROTHY H. CROSBY; ¦) Civil Action No. ¦
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