Charles W. Moore and Genevieve Moore v. Commissioner of Internal Revenue

The Tax Court found that petitioners’ taxes for the year 1961 were deficient in a substantial sum. We affirm the result without necessarily adopting the theory of the court below.

The dispute arises from a pair of 1961 transactions. On June 10th, Moore agreed to sell his one-third interest in the Big Springs Land and Cattle Company to David C. Bintliff. (Prior to this sale, Moore, Bintliff and Jack G. Taylor each owned one-third of the floundering corporation). Bintliff paid Moore $79,-840.46 in cash and gave him a 30-day non-exclusive oral option to purchase two of the corporation’s ranches. The option portion of the agreement made no mention of the purchase price at which Moore could acquire the property and was conditioned upon the approval of Taylor, the remaining stockholder. There was no indication that should the purchase price be unreasonable, or should Taylor fail to approve the option, that Moore would be able to recover any portion of his stock from Bintliff. On June 15th, pursuant to the June 10th agreement, Moore purchased the land from the corporation for $325,000.00. He forthwith resold it to a third party for $500,000.00.

In order to determine Moore’s taxable…