Edwin W. Pauley and Barbara Jean Pauley v. United States

In this action taxpayer seeks a refund of federal income taxes for the calendar year 1962. He asserts that he was entitled to a charitable deduction of $1,250,000 in that year instead of the lesser sum of $547,527.52 allowed by the Commissioner. The District Court allowed taxpayer the full deduction of $1,250,000 and gave judgment in his favor for a refund in the sum of $711,556.26. 25 A.F.T.R.2d fl70-532 (1970). The United States has taken this appeal.

In December, 1962, taxpayer owned a 30% per cent interest in a partnership conducting business as the Los Angeles Rams Football Club. Disputes had arisen between taxpayer and two partners aligned with him (the Pauley group) on the one hand and another partner (Daniel F. Reeves) on the other, and it was agreed that a sale of partnership interests would be accomplished by auction, each side bidding for the partnership interests of the other. The auction sale was fixed for December 27, 1962. The successful bidder was obliged to pay 25 per cent of the purchase price on the following business day and the balance between January 3, 1963, and February 15, 1963. The payments were to be made to Mr. Pete Rozelle, Commissioner of the…