Mayer

A patent of one Gruber on a device called the Viewmaster has resulted in a commercial success, at least until someone makes a better one.

Gruber, on the license of his retained one half interest in the basic patent, has secured capital gains treatment and, thus, lower federal income taxes for the taxable years 1950, 1951 and 1952. Edwin F. Mayer, Harold J. Graves, Thomas O, Meyer and Raymond F. Kelly, 1 herein *684 sometimes called the Sawyer partners who have shifted around their one half interest in a manner most difficult to follow, have been denied the relief 2 granted Gruber. (The Sawyer partners obtained the one half interest in the patent for assisting Gruber in working out manufacturing methods.)

It is not suggested that the shifts of the Sawyer partners in their interest were shrewdly designed to save taxes. If they get capital gains, and we so hold, they have just stumbled into them. The partners held fairly frequent meetings and recorded their transactions inartfully but with full ceremony. Sometimes a formal contract was made and signed. Other times they just “resolved.”

The Gruber-Sawyer partner venture began in 1938 in a conversation between Gruber and Graves.…