Francis E. Holman and Eloise F. Holman, His Wife v. Commissioner of Internal Revenue, William M. Holman and Emily L. Holman, His Wife v. Commissioner of Internal Revenue

564 F.2d 283 77-2 USTC P 9749 Francis E. HOLMAN and Eloise F. Holman, his wife, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. William M. HOLMAN and Emily L. Holman, his wife, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Nos. 76-3671, 76-3672. United States Court of Appeals, Ninth Circuit. Nov. 3, 1977. William M. Holman, Seattle, Wash. (argued), for appellants. Gilbert S. Rothenberg, Dept. of Justice, Washington, D.C. (argued), for appellee. Appeal from the Decisions of the United States Tax Court. Before WALLACE and SNEED, Circuit Judges, and BOLDT * , District Judge. SNEED, Circuit Judge: 1 Francis E. Holman and William M. Holman were partners in a law firm from which, pursuant to the terms of the partnership agreement, they were expelled. As a consequence, again pursuant to the partnership agreement, they received in the taxable years of 1969 and 1970 certain amounts for their interests in the partnership "inventory" which the partnership agreement defined to mean "accounts receivable" and "unbilled services." 2 The Holmans argue that these amounts in their entirety are entitled to be taxed as capital gains. The Commissioner insists that these amounts…