31:
303:
The Court began by noting that all gains or losses on the disposition of property must be realized, under section 1001(a) of the
Internal Revenue Code. The definition for “amount realized,” found in 1001(b), states “the amount realized from the sale or other disposition of property shall be the sum
316:
The Court specifically noted that the fair market value of the property at the time of disposition is irrelevant. Further, the nature of the loan (recourse or non-recourse) is also insignificant for purposes of determining basis. The Court defended its position by observing that the stated
317:
requirements force a taxpayer to account for the proceeds of obligations he has received tax-free and included in the property's basis. A finding otherwise would allow a mortgagee to recognize a tax loss without suffering a corresponding economic loss.
118:
When a taxpayer sells or disposes of property encumbered by a nonrecourse obligation exceeding the fair market value of the property sold, the
Commissioner may require him to include in the “amount realized” the outstanding amount of the
280:
of the property was $ 1,400,000, and their basis in the property was $ 1,455,740 (i.e.: the $ 1,851,500 which they borrowed, plus their invested capital of $ 44,212, minus deductions taken in the amount of $ 439,972.)
890:
882:
938:
320:
In applying the opinion's statement of law to the present facts, the Court concluded that the taxpayers’ disposition of property realized a gain of approximately $ 400,000; not their claim of a $ 55,740 loss.
797:
1005:
1133:
1165:
1157:
946:
914:
1149:
1125:
874:
295:
How should the tax court deal with the transfer of non-recourse mortgage debt in property dispositions when the fair market value of the property is less than the property's basis?
922:
906:
1243:
789:
749:
287:
The Tax
Commissioner argued that the tax should equal the excess of the principal amount of debt over basis. If so, then the taxpayers actually realized a gain of $ 400,000.
669:
805:
1080:
866:
261:
may require him to include in the “amount realized” the outstanding amount of the obligation; the fair market value of the property is irrelevant to this calculation.
1072:
898:
837:
829:
1141:
965:
845:
637:
533:
404:
330:
72:
1228:
989:
813:
105:
973:
765:
997:
741:
284:
The taxpayers argued that their tax consequences should equal the excess of fair market value over basis. If so, they would have a loss of $ 55,740.
821:
757:
688:
1223:
628:
1238:
1233:
1181:
1109:
653:
930:
35:
1117:
273:
complex. Later, they sold the complex for no consideration other than the assumption of the non-recourse liability.
661:
258:
313:; specifically that the phrase “amount realized” must include the amount of mortgage debt liability transferred.
1200:
1088:
1037:
720:
712:
621:
335:
580:
242:
1173:
1064:
544:
781:
614:
562:
97:
571:
307:
The Court considered, and ultimately reaffirmed, the holding of a previous opinion rendered in
304:
of any money received plus the fair market value of the property (other than money) received.”
250:
186:
142:
1029:
606:
537:
408:
383:
366:
309:
224:
64:
553:
8:
166:
79:
1021:
1013:
773:
704:
510:
485:
472:
Cunningham, Alice (1984). "Payment of Debt with
Property—The Two-Step Analysis after
411:
387:
370:
277:
254:
228:
178:
174:
154:
134:
101:
67:
696:
981:
162:
1217:
514:
489:
598:
501:: The Case against the Fair Market Value Limitation on Amount Realized".
150:
270:
589:
269:
Taxpayers borrowed $ 1,851,500 on a non-recourse basis to build an
246:
30:
636:
54:
Commissioner of
Internal Revenue v. John F. Tufts, et al.
241:, 461 U.S. 300 (1983), was a unanimous decision by the
1244:
United States
Supreme Court cases of the Burger Court
331:
List of United States
Supreme Court cases, volume 331
891:Continental Tie & Lumber Co. v. United States
1215:
883:Texas & Pacific Railway Co. v. United States
939:General American Investors Co. v. Commissioner
249:sells or disposes of property encumbered by a
622:
496:
1229:United States taxation and revenue case law
417:
629:
615:
471:
798:Merchants' Loan & Trust v. Smietanka
689:Stratton's Independence, Ltd. v. Howbert
1182:United States v. General Dynamics Corp.
1006:United States v. Safety Car Heating Co.
1216:
1134:Helvering v. Independent Life Ins. Co.
610:
18:1983 United States Supreme Court case
1166:Hoover Express Co. v. United States
1110:Brushaber v. Union Pacific Railroad
654:Brushaber v. Union Pacific Railroad
13:
1158:Tank Truck Rentals v. Commissioner
1118:Burnet v. Sanford & Brooks Co.
947:Commissioner v. Gillette Motor Co.
931:Commissioner v. Glenshaw Glass Co.
915:Helvering v. Northwest Steel Mills
497:Pino-Anderson, E. (1982). "Contra
465:
36:Supreme Court of the United States
14:
1255:
1224:United States Supreme Court cases
638:United States Sixteenth Amendment
540:300 (1983) is available from:
522:
662:Stanton v. Baltic Mining Company
259:Commissioner of Internal Revenue
29:
1239:United States property case law
1150:Millinery Corp. v. Commissioner
1126:McLaughlin v. Alliance Ins. Co.
875:Burk-Waggoner Assoc. v. Hopkins
1234:1983 in United States case law
923:Crane-Johnson Co. v. Helvering
453:
444:
435:
426:
393:
376:
359:
347:
1:
1201:Bowers v. Kerbaugh-Empire Co.
907:Helvering v. National Grocery
713:Bowers v. Kerbaugh-Empire Co.
341:
336:Taxation in the United States
276:At the time of the sale, the
790:Rockefeller v. United States
750:Southern Pacific Co. v. Lowe
100:756 (1978), reversed by 651
7:
670:Tyee Realty Co. v. Anderson
399:Tufts at 304-307; see also
324:
243:United States Supreme Court
10:
1260:
1174:Cammarano v. United States
599:Oyez (oral argument audio)
298:
257:of the property sold, the
1192:
1099:
1065:United States v. Sullivan
1056:
957:
856:
806:Miles v. Safe Deposit Co.
731:
680:
645:
245:, which held that when a
223:
218:
210:
199:
194:
128:
123:
117:
112:
92:
87:
59:
49:
42:
28:
23:
1081:Commissioner v. Sullivan
867:Edwards v. Cuba Railroad
782:United States v. Phellis
290:
264:
43:Argued November 29, 1982
1073:Rutkin v. United States
382:Tufts at 304; see also
365:Tufts at 304; see also
1089:James v. United States
1038:United States v. Davis
721:Moore v. United States
356:, 461 U.S. 300 (1983).
251:nonrecourse obligation
143:William J. Brennan Jr.
1046:Commissioner v. Tufts
1030:Crane v. Commissioner
899:Helvering v. Mitchell
838:Koshland v. Helvering
830:Marr v. United States
530:Commissioner v. Tufts
474:Commissioner v. Tufts
401:Crane v. Commissioner
354:Commissioner v. Tufts
310:Crane v. Commissioner
238:Commissioner v. Tufts
24:Commissioner v. Tufts
1142:Helvering v. Winmill
203:Blackmun, joined by
78:103 S. Ct. 1826, 75
966:Goodrich v. Edwards
846:Helvering v. Gowran
734:corporate dividends
581:Library of Congress
503:Pacific Law Journal
187:Sandra Day O'Connor
167:Lewis F. Powell Jr.
45:Decided May 2, 1983
1193:Diminution of loss
1022:Helvering v. Horst
1014:Helvering v. Bruun
990:Lucas v. Alexander
859:corporate earnings
814:Cullinan v. Walker
774:Eisner v. Macomber
705:Eisner v. Macomber
139:Associate Justices
1211:
1210:
974:Walsh v. Brewster
766:Peabody v. Eisner
278:fair market value
255:fair market value
234:
233:
175:William Rehnquist
155:Thurgood Marshall
1251:
998:Burnet v. Harmel
742:Lynch v. Turrish
631:
624:
617:
608:
607:
603:
597:
594:
588:
585:
579:
576:
570:
567:
561:
558:
552:
549:
543:
518:
493:
460:
457:
451:
448:
442:
439:
433:
430:
424:
421:
415:
397:
391:
380:
374:
363:
357:
351:
135:Warren E. Burger
124:Court membership
33:
32:
21:
20:
1259:
1258:
1254:
1253:
1252:
1250:
1249:
1248:
1214:
1213:
1212:
1207:
1188:
1101:
1095:
1057:Unlawful income
1052:
953:
858:
852:
822:Weiss v. Stearn
758:Lynch v. Hornby
733:
727:
697:Towne v. Eisner
676:
641:
635:
601:
595:
592:
586:
583:
577:
574:
568:
565:
559:
556:
550:
547:
541:
525:
468:
466:Further reading
463:
458:
454:
449:
445:
440:
436:
431:
427:
422:
418:
398:
394:
381:
377:
364:
360:
352:
348:
344:
327:
301:
293:
267:
179:John P. Stevens
177:
165:
153:
83:
44:
38:
19:
12:
11:
5:
1257:
1247:
1246:
1241:
1236:
1231:
1226:
1209:
1208:
1206:
1205:
1196:
1194:
1190:
1189:
1187:
1186:
1178:
1170:
1162:
1154:
1146:
1138:
1130:
1122:
1114:
1105:
1103:
1102:and exemptions
1097:
1096:
1094:
1093:
1085:
1077:
1069:
1060:
1058:
1054:
1053:
1051:
1050:
1042:
1034:
1026:
1018:
1010:
1002:
994:
986:
982:Taft v. Bowers
978:
970:
961:
959:
955:
954:
952:
951:
943:
935:
927:
919:
911:
903:
895:
887:
879:
871:
862:
860:
854:
853:
851:
850:
842:
834:
826:
818:
810:
802:
794:
786:
778:
770:
762:
754:
746:
737:
735:
729:
728:
726:
725:
717:
709:
701:
693:
684:
682:
678:
677:
675:
674:
666:
658:
649:
647:
643:
642:
634:
633:
626:
619:
611:
605:
604:
563:Google Scholar
524:
523:External links
521:
520:
519:
494:
467:
464:
462:
461:
452:
443:
434:
425:
416:
392:
388:§ 1001(b)
384:26 U.S.C.
375:
371:§ 1001(a)
367:26 U.S.C.
358:
345:
343:
340:
339:
338:
333:
326:
323:
300:
297:
292:
289:
266:
263:
253:exceeding the
232:
231:
229:§ 1001(b)
225:26 U.S.C.
221:
220:
216:
215:
212:
208:
207:
201:
197:
196:
192:
191:
190:
189:
163:Harry Blackmun
140:
137:
132:
126:
125:
121:
120:
115:
114:
110:
109:
94:
90:
89:
85:
84:
77:
61:
57:
56:
51:
50:Full case name
47:
46:
40:
39:
34:
26:
25:
17:
9:
6:
4:
3:
2:
1256:
1245:
1242:
1240:
1237:
1235:
1232:
1230:
1227:
1225:
1222:
1221:
1219:
1203:
1202:
1198:
1197:
1195:
1191:
1184:
1183:
1179:
1176:
1175:
1171:
1168:
1167:
1163:
1160:
1159:
1155:
1152:
1151:
1147:
1144:
1143:
1139:
1136:
1135:
1131:
1128:
1127:
1123:
1120:
1119:
1115:
1112:
1111:
1107:
1106:
1104:
1098:
1091:
1090:
1086:
1083:
1082:
1078:
1075:
1074:
1070:
1067:
1066:
1062:
1061:
1059:
1055:
1048:
1047:
1043:
1040:
1039:
1035:
1032:
1031:
1027:
1024:
1023:
1019:
1016:
1015:
1011:
1008:
1007:
1003:
1000:
999:
995:
992:
991:
987:
984:
983:
979:
976:
975:
971:
968:
967:
963:
962:
960:
958:Taxable gains
956:
949:
948:
944:
941:
940:
936:
933:
932:
928:
925:
924:
920:
917:
916:
912:
909:
908:
904:
901:
900:
896:
893:
892:
888:
885:
884:
880:
877:
876:
872:
869:
868:
864:
863:
861:
855:
848:
847:
843:
840:
839:
835:
832:
831:
827:
824:
823:
819:
816:
815:
811:
808:
807:
803:
800:
799:
795:
792:
791:
787:
784:
783:
779:
776:
775:
771:
768:
767:
763:
760:
759:
755:
752:
751:
747:
744:
743:
739:
738:
736:
730:
723:
722:
718:
715:
714:
710:
707:
706:
702:
699:
698:
694:
691:
690:
686:
685:
683:
679:
672:
671:
667:
664:
663:
659:
656:
655:
651:
650:
648:
644:
639:
632:
627:
625:
620:
618:
613:
612:
609:
600:
591:
582:
573:
564:
555:
546:
545:CourtListener
539:
535:
531:
527:
526:
516:
512:
508:
504:
500:
495:
491:
487:
483:
479:
475:
470:
469:
459:Tufts at 317.
456:
450:Tufts at 313.
447:
441:Tufts at 312.
438:
432:Tufts at 308.
429:
423:Tufts at 307.
420:
413:
410:
406:
402:
396:
389:
385:
379:
372:
368:
362:
355:
350:
346:
337:
334:
332:
329:
328:
322:
318:
314:
312:
311:
305:
296:
288:
285:
282:
279:
274:
272:
262:
260:
256:
252:
248:
244:
240:
239:
230:
226:
222:
217:
213:
209:
206:
202:
198:
195:Case opinions
193:
188:
184:
180:
176:
172:
168:
164:
160:
156:
152:
148:
144:
141:
138:
136:
133:
131:Chief Justice
130:
129:
127:
122:
116:
111:
107:
103:
99:
95:
91:
86:
81:
75:
74:
69:
66:
62:
58:
55:
52:
48:
41:
37:
27:
22:
16:
1199:
1180:
1172:
1164:
1156:
1148:
1140:
1132:
1124:
1116:
1108:
1087:
1079:
1071:
1063:
1045:
1044:
1036:
1028:
1020:
1012:
1004:
996:
988:
980:
972:
964:
945:
937:
929:
921:
913:
905:
897:
889:
881:
873:
865:
844:
836:
828:
820:
812:
804:
796:
788:
780:
772:
764:
756:
748:
740:
719:
711:
703:
695:
687:
668:
660:
652:
529:
506:
502:
498:
481:
477:
473:
455:
446:
437:
428:
419:
414: (1947).
400:
395:
378:
361:
353:
349:
319:
315:
308:
306:
302:
294:
286:
283:
275:
268:
237:
236:
235:
219:Laws applied
204:
182:
170:
158:
146:
88:Case history
71:
53:
15:
211:Concurrence
151:Byron White
119:obligation.
1218:Categories
1100:Deductions
590:OpenJurist
478:Tax Lawyer
342:References
515:0030-8757
490:0890-4898
271:apartment
205:unanimous
80:L. Ed. 2d
60:Citations
640:case law
528:Text of
325:See also
247:taxpayer
214:O'Connor
200:Majority
106:5th Cir.
857:Taxable
732:Taxable
554:Findlaw
484:: 575.
299:Opinion
113:Holding
1204:(1926)
1185:(1987)
1177:(1959)
1169:(1958)
1161:(1958)
1153:(1956)
1145:(1938)
1137:(1934)
1129:(1932)
1121:(1931)
1113:(1915)
1092:(1961)
1084:(1958)
1076:(1952)
1068:(1927)
1049:(1983)
1041:(1962)
1033:(1947)
1025:(1940)
1017:(1940)
1009:(1936)
1001:(1932)
993:(1929)
985:(1929)
977:(1921)
969:(1921)
950:(1960)
942:(1955)
934:(1955)
926:(1940)
918:(1940)
910:(1938)
902:(1938)
894:(1932)
886:(1932)
878:(1925)
870:(1925)
849:(1937)
841:(1936)
833:(1925)
825:(1924)
817:(1923)
809:(1922)
801:(1921)
793:(1921)
785:(1921)
777:(1920)
769:(1918)
761:(1918)
753:(1918)
745:(1918)
724:(2024)
716:(1926)
708:(1920)
700:(1918)
692:(1913)
681:Income
673:(1916)
665:(1916)
657:(1916)
602:
596:
593:
587:
584:
578:
575:
572:Justia
569:
566:
560:
557:
551:
548:
542:
513:
509:: 79.
488:
386:
369:
227:
185:
183:·
181:
173:
171:·
169:
161:
159:·
157:
149:
147:·
145:
104:1058 (
646:Scope
536:
499:Tufts
407:
291:Issue
265:Facts
108:1981)
93:Prior
538:U.S.
511:ISSN
486:ISSN
409:U.S.
102:F.2d
98:T.C.
73:more
65:U.S.
63:461
534:461
476:".
405:331
96:70
82:863
68:300
1220::
532:,
507:14
505:.
482:38
480:.
403:,
630:e
623:t
616:v
517:.
492:.
412:1
390:.
373:.
76:)
70:(
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.