George L. Jantzer Et At. v. Commissioner of Internal Revenue

This is a timely petition for review of decisions of the Tax Court ( 32 T.C. 161 ) holding that certain additional taxes were payable for the years 1952 and 1953 by petitioning taxpayers, partners in the Trail Creek Lumber Co., a partnership, by reason of moneys received under the terms of a certain contract. The Commissioner of Internal Revenue had reduced the amounts of capital gams reported by that partnership, and to a similar extent, had increased its ordinary income. Such increase, of course, was payable by the individual partners.

The principal question before the Tax Court was the applicability of section 117(k) (2) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 117 (k) (2), which if applicable would authorize the taking of the income as capital gains. If that question were to be decided adversely to petitioners, there was an alternative assertion that the transaction amounted to a sale of capital assets under section 117 (a) (4) of the same Code.

The cases below were consolidated for trial, and tried on a stipulation of facts plus the testimony of Edmund W. Pease. While the returns here considered involve only the years Í.952 and 1953, chronologically petitioners’…