Lucas v. Schneider, No. 5578.

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Writing for the CourtDENISON, HICKS, and HICKENLOOPER, Circuit
Citation47 F.2d 1006
PartiesLUCAS v. SCHNEIDER.
Docket NumberNo. 5578.
Decision Date06 March 1931

47 F.2d 1006 (1931)

LUCAS
v.
SCHNEIDER.

No. 5578.

Circuit Court of Appeals, Sixth Circuit.

March 6, 1931.


John H. Pigg, of Washington, D. C. (Thomas J. Sparks and Frank A. Ropke, both of Louisville, Ky., and C. M. Charest, of Washington, D. C., on the brief), for appellant.

Elwood Hamilton, of Louisville, Ky., for appellee.

Before DENISON, HICKS, and HICKENLOOPER, Circuit Judges.

HICKS, Circuit Judge.

Bagby-Howe Drug Company, herein called the taxpayer, was a Kentucky corporation engaged at Louisville from 1904 to 1926 in the manufacture and sale of drugs at wholesale. Subsequent to March 1, 1913, and before the taxable year 1925, the taxpayer acquired certain real estate with improvements

47 F.2d 1007
at 626 Main street, Louisville, at an aggregate cost of $69,460.46. Prior to 1925, it took deductions in its income tax returns for depreciation of said property in the amount of $15,263, leaving an undepreciated balance of $54,197.46. In the taxable year 1924 the taxpayer executed two mortgages upon the property and received thereon $90,000 upon the first and $2,000 upon the second. In the taxable year 1925 it sold the property for $155,000, which was paid as follows

 Cash (paid in 1925) ................. $13,066.27
                 Commission on sale .................. 4,300.00
                 State and County taxes (paid by
                 purchaser) ........................ 568.48
                 Transfer taxes (paid by purchaser)
                 ................................... 65.25
                 Second mortgage notes, extending
                 over period of five years ......... 45,000.00
                 First mortgage notes, assumed by
                 purchaser ......................... 90,000.00
                 Second mortgage notes, assumed
                 by purchaser ...................... 2,000.00
                 ___________
                 Total selling price ................. $155,000.00
                

The profit realized or to be realized from the sale was $84,842.04, computed as follows:

 Total selling price ................. $155,000.00
                 Less cost of property
                 including improvements
                 ...................... $69,460.46
                 Less depreciation ...... 15,263.00
                 __________
                 54,197.46
                 Selling expense ........ 15,960.50
                 __________
                 70,157.96
                 ___________
                 $84,842.04
                

In its tax return for the year 1925 the taxpayer as a part of its gross income included as profit from the sale of the real estate the sum of $60,123.78. This resulted in a tax liability of $1,279.56 which was paid by appellee Schneider, trustee in bankruptcy, the taxpayer having been adjudicated a bankrupt on April 14, 1926. Appellee insists that the inclusion of the aforesaid sum of $60,123.78 in the return for 1925 was erroneous; that all the payment the taxpayer received that year upon the sale of the real estate was the $13,066.27 above indicated; that this payment did not exceed one-fourth of the purchase price, and that the taxpayer should therefore have made its 1925 return under section 212(d), and § 1208, of the Revenue Act of 1926, retroactively applied (U. S. Code, tit. 26, § 953(d) and section 953a, 26 USCA § 953(d) and section 953a), called the installment plan basis, and that when so made its taxable income for 1925 would amount to only $19,091.44; that it had therefore overstated its taxable net income on the entire year's business to the amount of $41,032.32 and had shown a profit of $11,841.22 when it had in fact sustained a loss of $29,191.12; that it had therefore overpaid its taxes and was entitled to recover the said payment of $1,279.56 and interest. Respondent insists that the taxpayer is not entitled to have its taxable income for the year 1925 on the sale of said real estate computed upon the installment plan basis, but that the entire profit of $84,842.04 should have been included in its return for that year.

The question for decision is whether the sale of the property was an installment sale within the meaning of said section 212(d). This question is made to depend by the statute upon whether the initial payments exceed one-fourth of the purchase price. If they do not it was an installment sale; otherwise it was not. It is necessary therefore...

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8 practice notes
  • Uihlein v. General Electric Co., No. 4391.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • April 8, 1931
    ...254 F. 810; Unkle v. Wills (C. C. A.) 281 F. 29; Harrison v. Clarke (C. C. A.) 182 F. 765; Susquehanna Coal Co. v. Pratt & Young (C. C. 47 F.2d 1006 A.) 276 F. 919; Sapulpa Petroleum Co. v. McCray (C. C. A.) 4 F.(2d) 645, 647; American Central Ins. Co. v. Harmon Knitting Mills (C. C. A.) 39......
  • Bostedt v. Comm'r of Internal Revenue, Docket No. 5395-75.
    • United States
    • United States Tax Court
    • June 27, 1978
    ...Commissioner, 19 B.T.A. 1050 (1930). Cf. Watson v. Commissioner, 20 B.T.A. 270 (1930). This result was also reached in Lucas v. Schneider, 47 F.2d 1006 (6th Cir. 1931), cert. denied 284 U.S. 622 (1931), and [70 T.C. 491] Sterling v. Ham, 3 F. Supp. 386 (S.D. Me. 1933). Similarly, in Riss v.......
  • United States v. Anderson, No. 15267.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • July 17, 1942
    ...been accepted in subsequent federal cases. Among the more recent cases which quote it or refer to it are Lucas v. Schneider, 6 Cir., 1931, 47 F.2d 1006-1008; In Hoyd v. Citizens Bank of Albany Co., 6 Cir., 1937, 89 F.2d 105, 107, in defining the word "property" as generally used, the Court ......
  • Riss v. CIR, No. 8530.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • November 10, 1966
    ...the seller of that part of the sale price. Burnet v. S. & L. Building Corp., 288 U.S. 406, 53 S.Ct. 428, 77 L.Ed. 861; Lucas v. Schneider, 47 F.2d 1006 (6th Cir.); Stephen A. Cisler, Jr., supra; James Hammond, supra; J. W. McWilliams, Williams v. C. I. R. 15 B.T.A. 329. "When a taxpayer's o......
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8 cases
  • Uihlein v. General Electric Co., No. 4391.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • April 8, 1931
    ...254 F. 810; Unkle v. Wills (C. C. A.) 281 F. 29; Harrison v. Clarke (C. C. A.) 182 F. 765; Susquehanna Coal Co. v. Pratt & Young (C. C. 47 F.2d 1006 A.) 276 F. 919; Sapulpa Petroleum Co. v. McCray (C. C. A.) 4 F.(2d) 645, 647; American Central Ins. Co. v. Harmon Knitting Mills (C. C. A.) 39......
  • Bostedt v. Comm'r of Internal Revenue, Docket No. 5395-75.
    • United States
    • United States Tax Court
    • June 27, 1978
    ...Commissioner, 19 B.T.A. 1050 (1930). Cf. Watson v. Commissioner, 20 B.T.A. 270 (1930). This result was also reached in Lucas v. Schneider, 47 F.2d 1006 (6th Cir. 1931), cert. denied 284 U.S. 622 (1931), and [70 T.C. 491] Sterling v. Ham, 3 F. Supp. 386 (S.D. Me. 1933). Similarly, in Riss v.......
  • United States v. Anderson, No. 15267.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • July 17, 1942
    ...been accepted in subsequent federal cases. Among the more recent cases which quote it or refer to it are Lucas v. Schneider, 6 Cir., 1931, 47 F.2d 1006-1008; In Hoyd v. Citizens Bank of Albany Co., 6 Cir., 1937, 89 F.2d 105, 107, in defining the word "property" as generally used, the Court ......
  • Riss v. CIR, No. 8530.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • November 10, 1966
    ...the seller of that part of the sale price. Burnet v. S. & L. Building Corp., 288 U.S. 406, 53 S.Ct. 428, 77 L.Ed. 861; Lucas v. Schneider, 47 F.2d 1006 (6th Cir.); Stephen A. Cisler, Jr., supra; James Hammond, supra; J. W. McWilliams, Williams v. C. I. R. 15 B.T.A. 329. "When a taxpayer's o......
  • Request a trial to view additional results

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