Wendell v. CIR
| Decision Date | 13 January 1964 |
| Docket Number | No. 98-101,Dockets 28282-28285.,98-101 |
| Parties | Mollie WENDELL, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. 44 WEST 3RD STREET CORP., Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. David WENDELL, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. ESTATE of Samuel WENDELL, Deceased, Steven M. Wendell and Robert B. Wilkes, Executors, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
Abraham Kaplan, of Kaplan & Zabronsky, New York City, for petitioners-appellants.
Morton K. Rothschild, Atty., Dept. of Justice, Washington, D. C. (Louis F. Oberdorfer, Asst. Atty. Gen., and Lee A. Jackson and David O. Walter, Attys., Dept. of Justice, Washington, D. C., on the brief), for respondent-appellee.
Before SWAN, CLARK, and MARSHALL, Circuit Judges.
Petitioner 44 West 3rd Street Corp., a New York corporation, was the owner of a loft building located at 44 West 3rd Street in Manhattan, title to which was taken by the City of New York by order of condemnation on August 5, 1955. Subsequently, on January 28, 1956, the corporation adopted a plan of liquidation seeking to have the gain realized from the condemnation of its property classed as a nonrecognizable one under § 337(a), I.R.C.1954,1 and within 12 months thereafter distributed all its property to its three stockholders, who join with the corporation as petitioners here. The final decree fixing the amount of compensation was entered on September 25, 1956, and payment was made on November 5, 1956. The Tax Court ruled that the "sale" here within the statutory meaning occurred when title passed on August 5, 1955, and the gain could not be excluded in computing the corporation's tax. 39 T.C. 809. These petitions for review therefore raise the narrow issue whether under the statute a "sale" occurred within 12 months of the adoption of a plan of complete liquidation of the taxpayer corporation when payment on condemnation was made by the condemnor within the period, although title had vested earlier.
There are obvious difficulties of interpretation in trying to link a condemnation proceeding to the ordinary sale, but we are required to do so here and should aim for a result consistent with the legislative purpose. See Hawaiian Gas Products v. C. I. R., 9 Cir., 126 F.2d 4, cert. denied 317 U.S. 653, 63 S.Ct. 48, 87 L.Ed. 525. The Internal Revenue Service takes the position that the sale "occurs" upon the order of the court, or other action, vesting title in the condemning authority and creating an obligation for it to pay just compensation. Rev.Rul. 59-108, 1959-1 Cum.Bull. 72. This is the view the Tax Court accepted in holding that the Commissioner correctly assessed a deficiency for the failure to include the long-term capital gain on the warehouse in the corporation's 1956 return.
The position of the Service is an eminently reasonable one. Certainly as a general rule in ordinary sales of realty the sale "occurs" no later than the vesting of title and possession or the right to immediate possession in the purchaser. In this proceeding, the vesting of title gave New York City all the rights of ownership and possession. Thus the date it vests is the date as of which the fair market value of the property is fixed. So the former owner of the condemned property is paid interest on his award from that date on. Analogizing, as we must, this proceeding to the sequence of events in a sale, it is difficult to see how we could say the "sale" had not occurred. Further, this position has received substantial and uniform judicial support. See Wood Harmon Corp. v. United States, D.C.S.D.N.Y., 206 F.Supp. 773, aff'd on other grounds, 2 Cir., 311 F.2d 918; Driscoll Bros. & Co. v. United States, D.C. N.D.N.Y., 221 F.Supp. 603; Dwight v. United States, D.C.N.D.N.Y., 1963, 225 F.Supp. 933; Place Realty Corp., 21 T. C.M. 754. See also C. I. R. v. Kieselbach, 3 Cir., 127 F.2d 359, aff'd as to another issue, Kieselbach v. C. I. R., 317 U.S. 399, 63 S.Ct. 303, 87 L.Ed. 358, where the court held that for the purposes of computing the holding period of a capital asset the owner ceased to hold it at the date of the order vesting...
To continue reading
Request your trial
-
Hollywood Baseball Ass'n v. Comm'r of Internal Revenue, Docket No. 93647.
...126 F.2d 4 (C.A. 9), affirming 43 B.T.A. 655, certiorari denies 317 U.S. 653; 44 West 3rd Street Corporation, 39 T.C. 809, affd. 326 F.2d 600 (C.A. 2). The parties clearly intended that the payment be for property previously owned and not for replacement of estimated future income. During t......
-
Central Tablet Manufacturing Co v. United States 8212 593 25 8212 26, 1974
...is not entitled to the benefits of § 337 when property is condemned prior to the adoption of a liquidation plan. Wendell v. Commissioner, 326 F.2d 600 (CA2 1954); Dwight v. United States, 328 F.2d 973 (CA2 1964); Covered Wagon, Inc. v. Commissioner, 369 F.2d 629 (CA8 1966); Likins-Foster Ho......
-
Likins-Foster Honolulu Corp. v. CIR
...prior to adoption of the plan. Covered Wagon, Inc. v. C. I. R., supra; Dwight v. United States, 2 Cir., 328 F.2d 973; Wendell v. C. I. R., 2 Cir., 326 F.2d 600, and cases cited therein; Rev.R. 59-108, 1 Cum.Bul. 72; cf. West Street-Erie Boulevard Corp. v. United States, N.D.N.Y., 294 F.Supp......
-
CENTRAL TABLET MFG. CO. V. UNITED STATES
...417 F.2d 285 (CA10 1969), cert. denied, 397 U.S. 987 (1970); Dwight v. United States, 328 F.2d 973 (CA2 1964); Wendell v. Commissioner, 326 F.2d 600 (CA2 1964). Page 417 U. S. 688 The taxpayer's position here would favor the casualty taxpayer over the condemnation Although perhaps not an ex......