Frank H. Gilbert and Hazel P. Peterson v. Commissioner of Internal Revenue

Frank H. Gilbert and his wife, now Hazel P. Peterson, filed a joint income tax return for the calendar year 1949, in which the profit on a sale of certain stock was reported on the installment basis. The Commissioner of Internal Revenue thereafter determined that the profit could not be so reported, and notified the taxpayers of a tax deficiency in the amount of $47,603.77. In a deficiency redetermination proceeding initiated Tax Court of the the ruling of the by the taxpayers, the United States upheld commissioner. On this review of the tax court’s decision, the cnly question presented is whether petitioners were entitled to report the profit on the 1949 stock sale on the installment basis.

The be paid in eight For our purposes, it is necessary to consider only one feature of the rather involved 1949 transact on. The contract of sale whereby the stock was sold provided for no payments in 1949. purchase price was to equal semi-annual instillments, the first of which was payable on March 1, 1950. It was the view of the commissioner and the tax court that the failure to provide for any payment in the taxable year in which the transaction occurred precluded petitioners from…