Cowden v. C.I.R

21 Citing cases

  1. Warren Jones Co. v. Comm'r of Internal Revenue

    60 T.C. 663 (U.S.T.C. 1973)   Cited 9 times
    In Warren Jones Co. v. Commissioner, 60 T.C. 663 (1975), the Tax Court adopted the cash equivalency doctrine as set forth in Cowden v. Commissioner, 289 F.2d 20 (5th Cir. 1961), rev'g and remanding 32 T.C. 853 (1959), and held that the debt obligation was not income because it was not a cash equivalent.

    In Kaufman, the differences between this Court and the Court of Appeals related to the quantum and not the concept of a discount. The reference in Cowden v. Commissioner, 289 F.2d 20, 24 (C.A. 5, 1961), to ‘a discount not substantially greater than the generally prevailing premium for the use of money,‘ quoted in the majority opinion, is, to my mind, misleading. Taken literally, it would have the practical effect of rendering sec. 453 nugatory, especially when that section is considered in conjunction with sec. 483.

  2. Joyner Family Ltd. P'ship v. Comm'r

    T.C. Memo. 2019-159 (U.S.T.C. Dec. 11, 2019)

    Accordingly, we must determine the fair market values of the notes, if possible. Petitioners argue that for cash method taxpayers a note is included in income upon receipt only if the note is the equivalent of cash, citing Cowden v. Commissioner, 289 F.2d 20 (5th Cir. 1961), rev'g and remanding 32 T.C. 853 (1959), Warren Jones Co. v. Commissioner, 60 T.C. 663 (1973), rev'd, 524 F.2d 788 (9th Cir. 1975), and Felt v. Commissioner, T.C. Memo. 2009-245, aff'd, 433 F. App'x 293 (5th Cir. 2011). They argue that the notes are not cash equivalents and JFLP did not have any gain upon receipt of the notes.

  3. Watson v. Commr. of Internal Revenue Service

    613 F.2d 594 (5th Cir. 1980)   Cited 11 times

    This Court has previously been called upon to determine whether commercial instruments constitute taxable income in the year of receipt. Cowden v. Commissioner, 289 F.2d 20 (5th Cir. 1961); Dennis v. Commissioner, 473 F.2d 274 (5th Cir. 1973). The Court has emphasized that "economic realities, not legal abstractions" govern the reach of the tax laws. Cowden, 289 F.2d at 24.

  4. Warren Jones Company v. C. I. R

    524 F.2d 788 (9th Cir. 1975)   Cited 17 times
    Determining that Congress enacted the opt-out provision to alleviate the "hardships" associated with reporting an installment sale as the full fair market value of the property, received on the date contracted

    . . . if the promise to pay of a solvent obligor is unconditional and assignable, not subject to set-offs, and is of a kind that is frequently transferred to lenders or investors at a discount not substantially greater than the generally prevailing premium for the use of money, such promise is the equivalent of cash . . . Warren Jones Co., supra at 668-69, quoting, Cowden v. Commissioner, 289 F.2d 20, 24 (5th Cir. 1961). Applying the quoted definition, the Tax Court held that the taxpayer's contract, which had a face value of $133,000, was not the "equivalent of cash" since it had a fair market value of only $76,980.

  5. Anikeev v. Comm'r

    T.C. Memo. 2021-23 (U.S.T.C. Feb. 23, 2021)

    Rather, they purchased cash equivalents, in the form of Visa gift cards, Reloads for the Green Dot card, and money orders, to which no such adjustment can apply. See Cowden v. Commissioner, 289 F.2d 20, 24 (5th Cir. 1961) (setting forth the cash equivalence doctrine); Bixby v. Commissioner, 58 T.C. 757 (1972) (cash equivalents have basis equal to face value). As a result, the Reward Dollars paid to petitioners as statement credits for the charges relating to cash equivalents are an accession to wealth and income to petitioners under I.R.C. § 61.

  6. Reed v. C.I.R

    723 F.2d 138 (1st Cir. 1983)   Cited 13 times
    In Reed v. C.I.R., 723 F.2d 138 (1st Cir. 1983), the First Circuit rejected the proposition that a taxpayer's "unconditional right to future payment from an irrevocable escrow account" constituted "taxable income in the year the escrow account was created"; the Court instead stressed that what mattered for taxability purposes is whether the taxpayer "received a present beneficial interest in the escrow funds," in that they were the equivalent of investment income.

    This is true even though: 1) the purchaser was initially willing to contract for immediate payment; and 2) the taxpayer's primary objective in entering into the deferred payment agreement was to minimize taxes. Goldsmith, 586 F.2d 819; Schniers, 69 T.C. 517-18; Cowden v. Commissioner, 289 F.2d 20, 23, 23 n. 1 (5th Cir. 1959). A deferred payment agreement is considered bona fide and hence given its full legal effect, if the parties intended to be bound by the agreement and were, in fact, legally bound.

  7. Denver Rio Grande Western Rd. Co v. U.S.

    318 F.2d 922 (Fed. Cir. 1963)   Cited 12 times
    In Denver Rio Grande Western R.R. Co. v. United States, 318 F.2d 922, 162 Ct.Cl. 1 (1963), this court held that the time of actual receipt of the dividend governed its inclusion in taxable income (318 F.2d at 924-925, 162 Ct.Cl. at 5), and we adhere to that ruling as controlling under the facts of this case.

    Plaintiff obtained its car note in August 1947. It says — and defendant denies — that this note was valuable "property" in itself, received at that time. Promissory notes are usually such property, or the equivalent of cash, in the hands of the obligee (cf. Pinellas Ice Cold Storage Co. v. Commissioner, 287 U.S. 462, 468-469, 53 S.Ct. 257, 77 L.Ed. 428 (1933); Wolfson v. Reinecke, 72 F.2d 59 (C.A.7, 1934); Cowden v. Commissioner, 289 F.2d 20, 24 (C.A.5, 1961); Turner v. Commissioner, 303 F.2d 94, 96 (C.A.4, 1962) cert. denied, 371 U.S. 922, 83 S.Ct. 289, 9 L.Ed.2d 230), but that proposition is not universally true (cf. Schlemmer v. United States, 94 F.2d 77 (C.A.2, 1938); Cowden v. Commissioner, supra; Hudson v. Commissioner, 11 T.C. 1042, 1050-1051 (1948), aff'd per curiam, Hudson Engineering Corp. v. Commissioner, 183 F.2d 180 (C.A.5, 1950); Crosby v. Commissioner, 14 B.T.A. 980 (1929)). Here, we believe, the note was so framed that it did constitute property in taxpayer's possession as soon as it was received.

  8. Silverman v. Comm'r of Internal Revenue (In re Estate of Silverman)

    98 T.C. 6 (U.S.T.C. 1992)   Cited 3 times

    See Gertzman, Federal Tax Accounting, par. 3.03[1][d] at 3-15 (1988). The Ninth Circuit expressed the view that its holding does not conflict with the Fifth Circuit's view in Cowden v. Commissioner, 289 F.2d 20 (5th Cir. 1961), revg. 32 T.C. 853 (1959). Warren Jones Co. v. Commissioner, 524 F.2d 788, 794 n.9 (9th Cir. 1975), revg. 60 T.C. 863 (1973).

  9. Felt v. C.I.R

    433 F. App'x 293 (5th Cir. 2011)   Cited 7 times

    A promissory note may be treated as the equivalent of cash and taxable in the manner of cash unless the taxpayer can establish facts that support an exception to this general rule. Cowden v. Comm'r, 289 F.2d 20, 24 (5th Cir. 1961). The relevant exceptions are that the note was not made by a solvent obligor, was conditional and unassignable, subject to set-off, or not of a type frequently transferred to lender or investors at a discount not substantially greater that than the generally prevailing premium for the use of money.

  10. Bright v. U.S.

    926 F.2d 383 (5th Cir. 1991)   Cited 4 times

    As Cornell or her privies imposed the restrictions upon use in the instant case, our holding is not inconsistent with those cases upon which the executor relies. The executor also claims that as the Holdings check was drawn for such a large amount, it is not a cash equivalent because it fails the readily marketable and immediately convertible test which this circuit established in Cowden v. Commissioner, 289 F.2d 20, 24 (5th Cir. 1961); see Watson v. Commissioner, 613 F.2d 594, 597 (5th Cir. 1980) ("This court has previously been called upon [citing, inter alia, Cowden] to determine whether commercial instruments constitute taxable income in the year of receipt."); see also Rev. Ruling 68-606 (finding in Cowden a readily marketable and immediately convertible to cash component). Because the funds were available as "same day funds" to the taxpayer through Fidelity, this is a bootless argument.