# Estate of Durkin v. Commissioner

> United States Tax Court · November 18, 1992 · 99 T.C. 561

URL: https://www.frixlaw.com/law-library/cases/4486708

## Case

- **Full name:** Estate of James J. Durkin, Sr., James J. Durkin, Jr., Personal Representative, and Anna Jean Durkin v. Commissioner of Internal Revenue
- **Court:** United States Tax Court
- **Decided:** November 18, 1992
- **Citations:** 99 T.C. 561; 99 T.C. No. 30; 1992 U.S. Tax Ct. LEXIS 85
- **Precedential status:** Published
- **Opinion:** Dissent by Halpern
- **Judges:** Cohen,Jacobs,Gerber,Wright,Parr,Wells,Ruwe,Swift,Chiechi,Jacobs,Wright,Parr,Wells,Chabot,Gerber,Halpern,Whalen,Beghe,Beghe,Whalen,Halpern
- **Cited by:** 42 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4486708

## How later opinions describe it (automated extraction)

- explaining application of Daniel-son rule and strong proof standard to facts of that case

## Opinion text

Halpern, J., dissenting: Although I fully join in Judge Beghe’s dissent, I write separately to emphasize my astonishment at the result reached by the majority and to provide an abbreviated critique for those without the appetite for Judge Beghe’s seven-course analysis.
Consider the following example: X Corp. is a successful, closely held corporation, whose outstanding stock consists of 100 shares, each worth $lx, held equally by A and B, unrelated individuals. A decides that she has had enough of the corporate world and wishes to dispose of her shares and move to Florida. B wants to continue with X Corp. A offers her shares to B, but B has insufficient funds to buy them. There is, however, $40x in the X Corp. treasury, and B can obtain $10x. To accomplish a buyout of A, it is agreed that, sequentially, on the same day, (1) X Corp. will distribute $40x to A and (2) B will then purchase A’s 50 shares for $10x. Not being advised by tax counsel, A, B, and X Corp. characterize the distribution of $40x from X Corp. to A as a dividend. A’s tax preparer, however, is wiser, and treats the whole $50x received by A as a payment in exchange for her stock. I am certain that, notwithstanding what the parties called the distribution from X Corp., this Court should treat the transaction as reported by A’s tax preparer. See Smith v. Commissioner, 82 T.C. 705 (1984); Roth v. Commissioner, T.C. Memo. 1983-651 . I do not think that result would change if, in addition to the facts stated, A, at the same time, purchased an asset from X Corp. at a fair market value price. In essence, that latter case is the case at hand, except that, in the case at hand, the “dividend” was achieved by way of a bargain purchase from the corporation. I fail to see how the tax result for the case at hand can be any different than for the hypotheticals here presented. Accordingly, I believe the majority is wrong.
Whalen and Beghe, JJ., agree with this dissent.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4486708. Public record. Not legal advice.