Goold

The propriety of respondent Commissioner’s determination that the petitioner received a partnership interest from his father by gift rather than by sale, is the issue tendered by this appeal from the Tax Court’s decision, affirming respondent’s determination.

Respondent assessed income tax deficiencies for the year 1943 against petitioner upon the theory that a partnership interest transferred by his father to petitioner was a gift and hence his separate property, making the income therefrom separate property. The petitioner treated his income from the partnership as community property of himself and his wife and reported it as such. He was correct in so doing if the partnership interest was sold and not given to him.

Father Goold conducted a general contracting business in Stockton, California. In January of 1943 he transferred a half interest therein to petitioner. Petitioner paid for it by his promissory note in the sum of $100,000, payable without interest and out of 25% of petitioner’s share of future earnings of the partnership. The record shows payments to have been made on the principal amount of the note, evidenced by endorsements on the back thereof. The transfer of…