N. M. Sellers and Gladys Sellers v. Commissioner of Internal Revenue

Petitioners, husband and wife, each sought a review of decisions of the tax court assessing each for the tax years 1944 and 1945 with one half the income of a partnership of the two petitioners in a Coca Cola bottling and selling enterprise owned by the partners. This court, on the stipulation of the parties, consolidated the petitions, the issues tendered in each being the same.

The petitioners contend that the partnership instead of being between the husband and wife was a four-party family partnership consisting in addition to the petitioners their two children, a son Jack Sellers, 24 years of age in 1944 and a daughter Virginia Sellers, 19 years of age in 1944.

It is nowhere contended that the parents made a gift to each of the children of a quarter interest of their Coca Cola business. They thus avoided a large gift tax on a gift of a quarter each of a very large profit-earning enterprise, taken over from a corporation, the Coca Cola Bottling Co. of Sacramento, Ltd., in which the parents owned 96.4% of the stock. Their contention is that each child being of a contractual age, contracted for each to assume a quarter interest in the assets and liabilities of the family…