Joe Goldstein and Lillian Goldstein v. Commissioner of Internal Revenue

This case involves the assessment of a deficiency in federal income tax for the year 1953. Appellant filed a joint income tax return for 1953, and received a notice of deficiency in the amount of $28,-404.13. Appellant thereupon filed a petition with the Tax Court for a redetermination of the deficiency under the provisions of Section 272(a) of the Internal Revenue Code of 1939, 26 U.S.G. § 272(a). The Tax Court held that the $40,000.00 profit realized by appellant on the sale of real property to his family corporation, three weeks after he had purchased said property, was a disguised dividend and taxable as ordinary income, rather than a short term gain on the sale of a capital asset. A petition for review was filed in this court. Jurisdiction is conferred upon this court by Section 7482 of the Internal Revenue Code of 1954 ( 26 U.S.C. § 7482 , 1958 Ed.).

The evidence before the Tax Court consisted of stipulations, documents and oral testimony. It may be summarized as follows:

Appellant (and his wife) live in Los Angeles, California. In 1925, when seventeen years of age, appellant, the oldest of five brothers, started a retail grocery business as a sole proprietorship. As his…