- 13 -
Commissioner, supra at 124; Dettmers v. Commissioner, 430 F.2d
1019 (6th Cir. 1970), affg. Estate of Johnston v. Commissioner,
51 T.C. 290 (1968). Our factual inquiry must focus on the shift
of the benefits and burdens of ownership. Baird v. Commissioner,
supra at 124; Merrill v. Commissioner; 40 T.C. 66 (1963), affd.
per curiam 336 F.2d 771 (9th Cir. 1964). In a Federal tax
controversy, State law controls the determination of the
taxpayer's interest in the property, and the tax consequences are
then determined under Federal law. United States v. National
Bank of Commerce, 472 U.S. 713, 722 (1985) (and cases cited and
quoted therein).
Unquestionably, petitioners did not acquire legal title
until July 2, 1984. Accordingly, we must consider whether the
partnerships acquired equitable interests (i.e., the benefits and
burdens of ownership) prior to 1984. Our decisions in Williams
and Lang, and the District Court's decision in Benedict, used the
factors outlined in Grodt & McKay Realty, Inc. v. Commissioner,
77 T.C. 1221, 1237-1238 (1981) (where it was decided whether a
sale of cattle had occurred). We use the same factors here.
Legal Title. As in prior cases, legal title did not pass
until the closing or settlement, which was the date of the first
installment. As noted in other opinions, the lack of legal title
is not fatal to the completion of a sale of real property. For
example, in Baird v. Commissioner, supra at 126, it was held that
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011