Donald A. Jackson, Jr. And Marilynn Jackson v. Commissioner of Internal Revenue

Donald and Marilynn Jackson petitioned the Tax Court for redetermination of income tax deficiencies, contending (1) they did not realize taxable income upon the transfer of a joint venture interest to their wholly owned corporation, and (2) they were entitled to deduct certain rental expenses incurred in connection with a condominium held for the production of income. The Tax Court found for the Commissioner on both issues. The Jacksons appeal. We reverse on the first issue, affirm on the second.

I.

Donald Jackson owned a 50 per cent interest in a joint venture formed to construct an apartment project. On September 15, 1972, Jackson personally signed a promissory note for a short-term gap loan from Wells Fargo Bank to cover initial capital costs of the joint venture. On October 11, 1972, Jackson appointed his wholly owned corporation, Housing Specialists, Inc. (HSI), to act, with respect to the joint venture, as an agent for Jackson as an undis *1404 closed principal. On the same day, HSI and the other joint venturer obtained a construction loan from Gibraltar Savings and Loan Association. HSI appeared as a principal on the note. There was no evidence that Gibraltar was aware of…

(concurring and dissenting):

I concur in part II of Judge Browning’s “per curiam” opinion. I dissent from part I.

In my opinion, the tax court, in its Memorandum Decision, Tax Ct.Mem.Dec. (P-H) ¶ 81,594 (1981), correctly held that Jackson received a capital gain in his convoluted dealings between himself and his wholly-owned corporation, HSI.

As the tax court saw it, the joint venture became liable to Jackson in an amount equal to the loans Jackson received and passed on as contributions to the venture. There is ample evidence to support the conclusion that the venture intended to assume such an obligation, even if it was not to become primarily liable to Wells Fargo or Gibraltar. For example, the joint venture agreement states, in § 1.17, that it is understood that the venture will repay the loan from Wells Fargo; that loan is reflected as a liability on the venture’s 1972 tax return; and the venture actually repaid the loan in 1973. The venture agreement similarly stated that the Gibraltar loan was on behalf of the venture.

The finding by the tax court that the venture, through collateral agreements, agreed to repay the loan amounts, is not clearly erroneous. And because the…

708 F.2d 1402 83-1 USTC P 9427 Donald A. JACKSON, Jr. and Marilynn Jackson, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 82-7028. United States Court of Appeals, Ninth Circuit. Argued and Submitted Sept. 15, 1982. Decided June 20, 1983. Eliot S. Nahigian, Fresno, Cal., for petitioners-appellants. Kenneth L. Greene, Washington, D.C., for respondent-appellee. Appeal from the United States Tax Court. Before BROWNING, Chief Judge, DUNIWAY and PREGERSON, Circuit Judges. PER CURIAM: 1 Donald and Marilynn Jackson petitioned the Tax Court for redetermination of income tax deficiencies, contending (1) they did not realize taxable income upon the transfer of a joint venture interest to their wholly owned corporation, and (2) they were entitled to deduct certain rental expenses incurred in connection with a condominium held for the production of income. The Tax Court found for the Commissioner on both issues. The Jacksons appeal. We reverse on the first issue, affirm on the second. I. 2 Donald Jackson owned a 50 per cent interest in a joint venture formed to construct an apartment project. On September 15, 1972, Jackson personally signed a promissory…