Hay v. South Carolina Tax Commission
| Decision Date | 07 June 1979 |
| Docket Number | No. 20980,20980 |
| Citation | 255 S.E.2d 837,273 S.C. 269 |
| Parties | Frank S. and Jane C. HAY, Respondents, v. SOUTH CAROLINA TAX COMMISSION, and Robert C. Wasson, Chairman, Raymon R. Finch, Jr., Commissioner, and Charles N. Plowden, Commissioner, constituting the members of the South Carolina Tax Commission, Appellants. |
| Court | South Carolina Supreme Court |
Atty. Gen. Daniel R. McLeod, Deputy Atty. Gen. Joe L. Allen, Jr., Sr. Asst. Atty. Gen. G. Lewis Argoe, Jr. and Asst. Atty. Gen. John C. von Lehe, Columbia, for appellants.
Richard A. Jones, Jr. of Dodson & Dodson, Greenville, for respondents.
The following portions of the order of the lower court correctly dispose of all issues submitted on appeal, and will be reported as the judgment of this Court:
This action was brought pursuant to Section 12-47-210 and 12-47-220 of the South Carolina Code of Laws by the respondents to recover income taxes in the amount of Six Thousand Eight Hundred Forty-one and 60/100 ($6,841.60) Dollars paid under protest by the respondents for the year 1971. The taxes were assessed by the South Carolina Tax Commission after audit on the ground that the respondent, Frank S. Hay, failed to report taxable gain in 1971 from the sale of stock in Associated Oil Company, Inc., equal to the difference between the selling price agreed upon for the stock and its basis less the deduction equal to one-half (1/2) of the long-term capital gain allowed in Section 12-7-660(6) of the Code.
The basic facts are not in dispute. The sale of stock was a redemption of such stock by Associated Oil Company, Inc., and, although an agreement was made in 1971 whereby the company would redeem the seventy-five (75) shares of stock for a total price of Two Hundred Thousand and no/100 ($200,000.00) Dollars, the first annual payment of Twenty Thousand and no/100 ($20,000.00) Dollars was not due until September of 1973. An unsecured note of the corporation was given to evidence this indebtedness; however, the transaction was later modified and payment in full in the amount of Fifty Thousand and no/100 ($50,000.00) Dollars was made in 1972. The respondents reported no taxable income from the transaction in their timely filed 1971 South Carolina Income Tax Return, but they did include the Fifty Thousand and no/100 ($50,000.00) Dollar payment received on their 1972 South Carolina Income Tax Return. The appellant South Carolina Tax Commission treated the redemption of stock as a completed transaction and fully taxable in 1971 to the extent of the face value of the note.
The focus of this summary judgment action is whether the respondents satisfied the statutory requirements necessary to report this sale of stock on the installment basis and thus correctly reported no taxable income from the sale on their 1971 State Income Tax Return. If so, then the respondents are entitled to judgment and no further inquiry into the issue is necessary. If, however, the respondents did not qualify to report the sale of stock on the installment basis, the factual issue of the amount, if any to be reported in 1971 would then have to be determined. After review and deliberation, I have concluded that the respondents, in complying with state law regarding installment sales, properly reported no taxable income from the sale of stock in their South Carolina Income Tax Return for 1971.
Subsection (2) of Section 12-7-1360 of the South Carolina Code of Law permits installments reporting of gain from casual sales of real and person property. Subsection (2) states:
(2) Income (but not loss) from a sale or other disposition of real property, or a casual sale or other casual disposition of personal property (other than property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year) for a price exceeding one thousand dollars, may be returned on the basis and in the manner prescribed in item (1) of this section, except that such income may be so returned only if in the taxable year of the sale or other disposition there are no payments, or the payments (exclusive of indebtedness of the purchaser) do not exceed thirty per cent of the selling price. Provided, however, that the...
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