CIR v. Baertschi
Decision Date | 12 June 1969 |
Docket Number | No. 18994.,18994. |
Citation | 412 F.2d 494 |
Parties | COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. E. F. BAERTSCHI and Alma M. Baertschi, Respondents. |
Court | U.S. Court of Appeals — Sixth Circuit |
Chester C. Davenport, Jr., Department of Justice, Washington, D. C., Mitchell Rogovin, Asst. Atty. Gen., Lee A. Jackson, Robert N. Anderson, Attys., Department of Justice, Washington, D. C., on brief, for petitioner.
Justice G. Johnson, Jr., Toledo, Ohio, Marshall, Melhorn, Bloch & Belt, James F. Kennedy, Jr., Toledo, Ohio, on brief, for respondents.
Before EDWARDS and CELEBREZZE, Circuit Judges, and GORDON,* District Judge.
The Commissioner of Internal Revenue appeals from a split decision of the Tax Court where the majority held in favor of the taxpayers.
The question presented in this case concerns when a "sale" of a home is final for purposes of the nonrecognition of capital gain authorized by the Int. Rev. Code of 1954, § 1034.
In pertinent part the statute provides:
The statute was designed to give relief from the tax on capital gain to a home owner who sold an "old" residence and purchased a "new" one on the same inflated housing market. The statute itself limits nonrecognition of the gain to an exchange (by sale of the old and repurchase and use of the new) within one year of the date of sale of the old residence. If construction of a new residence is commenced within the year limitation referred to above, occupancy of the new home within 18 months of the sale will satisfy the statute.
The facts were stipulated before the Tax Court and it is only the legal conclusions which flow from them which concern us:
On these facts the Tax Court majority held that the taxpayers never had "an unqualified right to recover the consideration" for their old residence until May 31, 1963, when they were paid in full. The factor which the majority regarded as decisive was absence of the right, in the event of the purchasers' default, to proceed against them personally. The fourth clause of the purchase agreement provided in part:
"* * * The remedy or recourse of said parties of the first part for the non-performance of any obligation of the parties of the second part hereunder shall be limited solely to the moneys paid hereunder, and to the herein described property, and said parties of the second part shall not be liable for any deficiency arising from the sale of said property in any way, capacity or manner whatsoever, nor shall said parties of the first part have the right to, nor seek, a deficiency or other money judgment against said parties of the second part."
The Tax Court majority derived the test of finality of the sale from a 1936 opinion of the Second Circuit:
...
To continue reading
Request your trial-
MAJOR REALTY CORPORATION & SUBSIDIARIES v. Commissioner
...be postponed, for example, in order to provide security for the purchase price. See Commissioner v. Baertschi 69-2 USTC ¶ 9461, 412 F. 2d 494 (6th Cir. 1969), reversing Dec. 28,718 49 T.C. 289 (1967); Wiseman v. Scruggs 60-2 USTC ¶ 9690, 281 F. 2d 900 (10th Cir. 1960); Commissioner v. Union......
-
Derr v. Comm'r of Internal Revenue
...transferred on July 1, 1973: Clodfelter v. Commissioner, 426 F.2d 1391 (9th Cir. 1970), affg. 48 T.C. 694 (1967); Commissioner v. Baertschi, 412 F.2d 494 (6th Cir. 1969), revg. 49 T.C. 289 (1967); Deyoe v. Commissioner, 66 T.C. 904 (1976). We, however, have carefully considered each of thes......
-
Morrison v. United States, C74-504.
..."acquires" property purchased under land contract, the Sixth Circuit has decided analogous questions. In Commissioner of Internal Revenue v. Baertschi, 412 F.2d 494 (6th Cir. 1969) the Sixth Circuit determined the date on which property purchased under a land contract was acquired for purpo......
-
Tiger, Inc. v. Time Warner Entertainment Co., L.P., 5:98-CV-713.
...a "purchase" or "change in ownership" sufficient to trigger Plaintiff Tiger's contractual rights. For instance, in Commissioner v. Baertschi, 412 F.2d 494 (6th Cir. 1969), the Sixth Circuit discusses what has become known as the "practical test." This test is frequently applied in this Circ......
-
Rev. Proc. 2000-37 offers long-awaited reverse-exchange safe harbor.
...TC 570, 591 (1982). (29) See Michael S. Falsetti, 85 TC 332, 348 (1985). (30) See James T. Ryan, TC Memo 1995-579, citing E. F. Baertschi, 412 F2d 494, 498 (6th Cir. (31) See Rev. Proc. 2000-37, note 6 supra, at Section 1. (32) Id. at Sections 3.02 and 3.04. (33) Id. at Section 4.02. (34) S......