Hindes v. United States
| Decision Date | 07 January 1964 |
| Docket Number | No. 20604.,20604. |
| Citation | 326 F.2d 150 |
| Parties | Bob HINDES and wife, Dorothy Lee, Appellants, v. UNITED STATES of America, Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Muckleroy McDonnold, San Antonio, Tex., for appellants.
William O. Murray, Jr., Asst. U. S. Atty., San Antonio, Tex., Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Atty., Dept. of Justice, Washington, D. C., Ernest Morgan, U. S. Atty., San Antonio, Tex., Stephen B. Wolfberg, David O. Walter, Michael I. Smith, Attys., Dept. of Justice, Washington, D. C., for appellee.
Before HUTCHESON, BREITENSTEIN,* and BELL, Circuit Judges.
This appeal involves federal income taxes for the year 1957. It turns on the right of taxpayers to return the gain from a sale of realty on an installment basis. Title 26 U.S.C.A. § 453. The District Court rendered summary judgment in favor of appellee. See Hindes v. United States, W.D.Tex., 1963, 214 F. Supp. 583.
Mr. Hindes entered into negotiations for the sale of his ranch in the spring of 1957. He discussed the tax consequences of a sale with his lawyer, and was advised that an installment sale would result in considerable tax savings. The purchaser was not willing to purchase by installments for the reason that the funds with which the purchase was to be made came from an involuntary conversion of other land, and it was necessary that the funds be reinvested in land within a year. Title 26 U.S.C.A. § 1033. Mr. Hindes, then, without the knowledge of his lawyer, entered into a written contract of sale with the purchaser for $300,000, and accepted a $5,000 earnest money deposit.
He reported this fact to his lawyer who suggested that a corporation be set up, with Mr. and Mrs. Hindes selling the ranch to the corporation on installments, and with the corporation, in turn, to make the sale to the purchaser for cash. This suggestion was accepted, and the purchaser agreed to take title from the corporation for the same consideration. Tower Farm & Cattle Company, Inc. was chartered under the laws of the State of Texas, and purchased the ranch from Mr. and Mrs. Hindes for $265,000, from which was to be deducted the amount of a first mortgage upon the ultimate sale. This followed the plan agreed upon; Mr. Hindes hoping that this figure would net out more after taxes under the plan than the original purchase price figure of the contract under a direct sale to the purchaser for cash. This amount was to be paid in equal installments over a period of ten years, with interest at four percent per annum, and the indebtedness was represented by an unsecured note. The corporation then deeded the ranch to the ultimate purchaser for $300,000 cash, and simultaneously paid off a $58,574.81 first mortgage, leaving a net to the corporation of $241,425.19, and a net due taxpayers of $206,425.19. The real estate commission of $15,000, and the first installment to taxpayers was paid at or about this time by the corporation.
Within a few days thereafter, the corporation made an unsecured four percent loan to Mr. Hindes in the amount of $200,000, due five years from date, with interest payable annually.
The incorporators, and sole stockholders of the corporation were the mother and father of Mr. Hindes in the proportion of fifty percent, and his lawyer in the proportion of fifty percent. The corporation was capitalized at $1,000, and they contributed the capital. The lawyer charged no fee and looked to profit from the corporation to be made on the difference between the purchase and sale price for his gain out of the transaction. After the aforesaid payments, and a payment of $5,617.18 on the gain in federal income taxes, plus other miscellaneous payments, the corporation was liquidated with the result that the mother and father received some $6,000, and the lawyer some $6,000 in profits. In the meantime, Mr. Hindes repaid the corporation the sums due under his note and the stockholders, upon liquidation of the corporation, became liable for the remaining installments due taxpayers.
Taxpayers reported the sales price of $265,000 on their income tax return for the calendar year 1957, and elected to report the profit on the installment basis. An agent of the Commissioner of Internal Revenue, upon...
To continue reading
Request your trial
-
Church of Scientology of California v. Cazares
...for decisions granting summary judgment. 8 It is only necessary that there be no genuine issue as to any material fact. Hindes v. United States, 326 F.2d 150 (5th Cir.), cert. denied, 377 U.S. 908, 84 S.Ct. 1168, 12 L.Ed.2d 178 (1964). Here the court The Court has examined the record in thi......
-
Derr v. Comm'r of Internal Revenue
...as a conduit. Compare Commissioner v. Court Holding Co., supra; Griffiths v. Commissioner, 308 U.S. 355 (1939); Hindes v. United States, 326 F.2d 150 (5th Cir. 1964). Aside from the payments under the installment contract, which total $220,000, Aragon paid HPC a total of $150,000 which HPC ......
-
St. Paul Fire & Marine Ins. v. Engelmann
...if the court detects genuine issues of fact or genuine issues regarding the inferences to be drawn from the facts. Hindes v. United States, 326 F.2d 150, 152 (5thCir.1964), cert. denied, 377 U.S. 908, 84 S.Ct. 1168, 12 L.Ed.2d 178; 3 Barron and Holtzoff § 1239 (Wright ed. D. Insurer's Right......
-
Sierra Club, Inc. v. Sandy Creek Energy Associates, L.P.
...for summary judgment does not warrant the grant of either motion if the record reflects a genuine issue of fact."Hindes v. United States, 326 F.2d 150, 152 (5th Cir.1964).Analysis The question before this Court is how to interpret and apply § 112(g) to a coal-fired power plant still under c......