Snow

The appellees filed separate individual income tax returns with the Collector of Internal Revenue for the District of Idaho for the taxable year 1945. In these tax returns, appellees accounted for a community property net gain from the *104 sale of one-fourth interest in a partnership. The entire receipt, minus the basis, was treated as a capital gain under Section 117 of the Internal Revenue Code, 26 U.S.C. § 117 . The Collector of Internal Revenue levied an additional tax assessment for the taxable year 1945 on file individual return of John D. Snow in the amount of $20,376.60, including interest, and a like amount upon the individual return of his wife, Grace K. Snow, because the sale, was not the sale of a capital.asset as reported, but rather resulted in the receipt of ordinary income.

The appellees filed a claim with the Collector for the refund of the assessments and penalties and the claim was disallowed. Appellees brought suit for refund in the lower court to recover the additional sums paid. The court rendered judgment for appellees and the defendants below appealed.

On March 1, 1944, appellee, John D. Snow, associated himself as copartner with Burdell T. Curtis and R.…