Herrick v. Comm'r of Internal Revenue

18 Citing cases

  1. Soriano v. Comm'r of Internal Revenue

    90 T.C. 44 (U.S.T.C. 1988)   Cited 7 times

    Fox v. Commissioner, 80 T.C. 972, 1006 (1983), affd. * * * ‘Profit‘ in this context means economic profit, independent of tax savings. Herrick v. Commissioner, » 85 T.C. 237, 254 (1985)†; Surloff v. Commissioner, 81 T.C. 210, 233 (1983). Whether petitioner possessed the requisite profit objective is a question of fact to be resolved on the basis of all the facts and circumstances.

  2. Waddell v. Commissioner of Internal Revenue

    86 T.C. 848 (U.S.T.C. 1986)

    Contrary to petitioners' arguments, these judicial doctrines for evaluating nonrecourse obligations as part of cost basis vel non were not vitiated by the Supreme Court's decision in Commissioner v. Tufts, supra. See Herrick v. Commissioner, 85 T.C. 237, 261-262 (1985). See also Odend'hal v. Commissioner, 748 F.2d 908, 912-913 (4th Cir. 1984), affg. 80 T.C. 588 (1983); Brannen v. Commissioner, 722 F.2d 695, 702 n. 4 (11th Cir. 1984), affg. 78 T.C. 471 (1982); Flowers v. Commissioner, supra, 80 T.C. at 943-944 n. 44; Fox Park Corp. v. Commissioner, T.C. Memo. 1985-451.

  3. Waddell v. Comm'r of Internal Revenue

    86 T.C. 848 (U.S.T.C. 1986)

    Contrary to petitioners' arguments, these judicial doctrines for evaluating nonrecourse obligations as part of cost basis vel non were not vitiated by the Supreme Court's decision in Commissioner v. Tufts, supra. See Herrick v. Commissioner, 85 T.C. 237, 261-262 (1985). We also reject petitioners' argument that the at risk rules of section 465 supersede these judicial doctrines for testing the inclusion of purported nonrecourse debt in basis.

  4. Beck v. Comm'r of Internal Revenue

    85 T.C. 34 (U.S.T.C. 1985)   Cited 35 times

    ‘ Lemmen v. Commissioner, 77 T.C. 1326, 1340 (1981). See also Herrick v. Commissioner, 85 T.C. 237, 254 (1985); Flowers v. Commissioner, 80 T.C. at 931. ‘Profit‘ in this context means economic profit, independent of tax savings.

  5. National Commodity & Barter Ass'n/National Commodity Exchange v. United States

    843 F. Supp. 655 (D. Colo. 1993)   Cited 3 times
    Dismissing suit raising First Amendment challenge to § 6700 penalty

    For one, there is no evidence that there was a community of interest among all NCBA or NCE members to make "saved tax profits," More importantly, "saved-tax profits" are not what is meant by "profits" under the Internal Revenue Code. Profits generally mean economic profits, not tax savings. See, e.g., Herrick v. Commissioner, 85 T.C. 237, 1985 WL 15378 (1985) ("Profit" means economic, not tax, gains for purposes of I.R.C. § 162(a)); Surloff v. Commissioner, 81 T.C. 210, 1983 WL 14861 (1983); Slifka v. Commissioner, 182 F.2d 345 (2d Cir. 1950). Losses sustained by the NCBA because of the price stabilization plan, meanwhile, evince an intent that NCE members be shielded from, not share in, losses sustained by the enterprise.

  6. Marine v. Comm'r of Internal Revenue

    92 T.C. 61 (U.S.T.C. 1989)   Cited 33 times
    In Marine v. Commissioner, 92 T.C. 958, 967-977 (1989), aff'd without published opinion, 921 F.2d 280 (9th Cir. 1991), a pre-TEFRA case, we stated that, when a general partner embezzles limited partners' cash contributions, he is not acting in this capacity as a partner, since he has no authority to steal.

    We and other courts have rejected this argument in numerous cases. Saviano v. Commissioner, 765 F.2d 643, 649 (7th Cir. 1985), affg. 80 T.C. 955 (1983); Odend'hal v. Commissioner, 748 F.2d 908, 913 (4th Cir. 1984) affg. 80 T.C. 588 (1983) Brannen v. Commissioner, 722 F.2d 695, 702 n. 4 (11th Cir. 1984), affg. 78 T.C. 471 (1982) Herrick v. Commissioner, 85 T.C. 237, 261 (1985) Dean v. Commissioner, 83 T.C. 56, 78 n. 10 (1984). In Tufts, the Supreme Court extended the concept of Crane v. Commissioner, 331 U.S. 1 (1947) -- That the principal amount of a nonrecourse obligation must be included in the basis of property for purposes of computing the amount realized at sale -- to a case where the unpaid amount of the nonrecourse obligation exceeds the market value of the property at the time of sale.

  7. Hulter v. Comm'r of Internal Revenue

    91 T.C. 371 (U.S.T.C. 1988)

    ‘Profit‘ in this context means economic profit, independent of tax savings. Beck v. Commissioner, 85 T.C. 557, 570 (1985); Herrick v. Commissioner, 85 T.C. 237, 254 (1985); Surloff v. Commissioner, 81 T.C. 210, 233 (1983). Where a partnership is involved, the analysis of profit objective must be made at the partnership level and the proper focus is on the activities and intent of the general partners and promoters.

  8. Hulter v. Commissioner of Internal Revenue

    91 T.C. 371 (U.S.T.C. 1988)

    "Profit" in this context means economic profit, independent of tax savings. Beck v. Commissioner, 85 T.C. 557, 570 (1985); Herrick v. Commissioner, 85 T.C. 237, 254 (1985); Surloff v. Commissioner, 81 T.C. 210, 233 (1983). Where a partnership is involved, the analysis of profit objective must be made at the partnership level and the proper focus is on the activities and intent of the general partners and promoters.

  9. Taube v. Commissioner of Internal Revenue

    88 T.C. 464 (U.S.T.C. 1987)

    Under such circumstances, since there is no economic incentive to repay the obligation, it is considered that no genuine indebtedness exists. Deegan v. Commissioner, 787 F.2d at 827; Estate of Franklin v. Commissioner, 544 F.2d 1045, 1049 (9th Cir. 1976), affg. 64 T.C. 752 (1975); Coleman v. Commissioner, 87 T.C. 178, 209 (1986); Herrick v. Commissioner, 85 T.C. 237, 260 (1985). Moreover, the general reasoning of these cases may be applied to cases involving even recourse indebtedness and "serve as precedent for the Court's disregarding, for tax purposes, a portion of an asset's stated cost where the stated cost is not supported by a realistic valuation of the asset * * * even if the purchasers are considered personally liable for the entire purchase price."

  10. Taube v. Comm'r of Internal Revenue

    88 T.C. 464 (U.S.T.C. 1987)

    Under such circumstances, since there is no economic incentive to repay the obligation, it is considered that no genuine indebtedness exists. Deegan v. Commissioner, 787 F2d at 827; Estate of Franklin v. Commissioner, 544 F.2d 1045, 1049 (9th Cir. 1976), affg. 64 T.C. 752 (1975); Coleman v. Commissioner, 87 T.C. 178, 209 (1986); Herrick v. Commissioner, 85 T.C. 237, 260 (1985). Moreover, the general reasoning of these cases may be applied to cases involving even recourse indebtedness and ‘serve as precedent for the Court's disregarding, for tax purposes, a portion of an asset's stated cost where the stated cost is not supported by a realistic valuation of the asset * * * even if the purchasers are considered personally liable for the entire purchase price.