U.S. Court of Appeals for the Sixth Circuit, 1942

Rhodes' Estate v. Commissioner of Internal Revenue

U.S. Court of Appeals for the Sixth Circuit · Decided October 16, 1942 · Hamilton, Martin, McAllister

131 F.2d 50; 30 A.F.T.R. (P-H) 220; 1942 U.S. App. LEXIS 2705 (Federal Reporter, Second Series)

Counsel

F. E. Hagler, of Memphis, Tenn., for petitioner., Louise Foster, Spec. Asst. to Atty. Gen. (Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key, and Helen Carloss, Sp. Assts. to Atty. Gen., on the brief), for respondent.

Cases that cite this one

19 later published cases cite this decision. The 18 that cite it most often are listed here.

Estate of Stranahan v. Commissioner (United States Tax Court 1971)
John L. Greer, Sr., and Wife, Russell Z. Greer v. United States (6th Cir. 1969)
Crocker v. Commissioner (United States Tax Court 1962)
Jones v. Commissioner (5th Cir. 1962)
United States v. Snow (9th Cir. 1955)
United States v. Snow (9th Cir. 1955)
Paine v. Commissioner (United States Tax Court 1954)
Swiren v. Commissioner of Internal Revenue (7th Cir. 1950)
McAllister v. Commissioner of Internal Revenue (2d Cir. 1946)
Lattera v. Commissioner IRS (3d Cir. 2006)
Lattera v. Commissioner IRS (3d Cir. 2006)
Simon Jaglom and Marie Jaglom v. Commissioner of Internal Revenue (2d Cir. 1962)
The First National Bank Of Kansas City v. Commissioner Of Internal Revenue (1st Cir. 1962)
First National Bank of Kansas City v. Commissioner (8th Cir. 1962)
Tunnell v. United States (United States District Court for the District of Delaware 1957)
Lewis N. Cotlow v. Commissioner of Internal Revenue (2d Cir. 1955)
Fisher v. Commissioner of Internal Revenue (6th Cir. 1954)
Paradise Land & Livestock Co. v. Federal Land Bank of Berkeley (10th Cir. 1945)

This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.

Opinion

PER CURIAM.

On petition for review of a decision of the United States Board of Tax Appeals, it appears from the record that on November 18, 1937, the Carroll Furniture Company of Atlanta, Georgia, declared a cash dividend of $20.00 per share payable on December 18, 1937, to stockholders of record at 12:00 o’clock noon on November 26, 1937. The taxpayer, Herman W. Rhodes, was the record owner of 600 shares of stock of said company on each of the three said dates.

The taxpayer offered to sell his dividend right for $11,925.00 to C. H. Patton of Memphis, Tennessee, an intimate friend. The offer was accepted and on December 7, 1937, Patton borrowed $12,000.00 from a bank for the purpose of making the purchase and pledged the assigned dividend right as collateral for the loan.

The check in payment- of said dividend when issued on December 18, 1939, was made payable to Patton, who indorsed it to the bank from which he had obtained the loan, and the bank stamped the note paid and returned it to Patton.

The question is whether the amount received by the taxpayer from Patton should be treated as ordinary income as held by the Board, or whether such amount constitutes capital gain which is available as an offset against capital losses as the petitioner contends.

In our opinion under the circumstances here present, the sum received by the taxpayer was not capital gain as that phrase is used in Section 117(b) of the Revenue Act of 1936, 49 Stat. 1648, c. 690, 26 U.S.C.A. Int.Rev.Acts, page 873, but was taxable as ordinary income under Section 22(a) of the Revenue Act of 1936, 49 Stat. 1648, c. 690. Compare Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75, 131 A.L.R. 655; Helvering v. Eubank, 311 U.S. 122, 61 S.Ct. 149, 85 L.Ed. 81; Harrison v. Schaffner, 312 U.S. 579, 61 S.Ct. 759, 85 L.Ed. 1055.

The order of the Board is affirmed.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.