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Issue 3. Ownership of Woodbine
The questions for decision on this issue are who owned the
Woodbine assets and business from the beginning of 1988 through
March 14, 1989, and thereafter, until November 17, 1989. The
answers to these questions should enable us to allocate the tax
liabilities on the Woodbine income for those periods and on the
gain from the sale of Woodbine to the Kunkowskis.
Income is taxable to the taxpayer who earns and controls it.
Lucas v. Earl, 281 U.S. 111 (1930). "The choice of the proper
taxpayer revolves around the question of which person or entity
in fact controls the earning of income rather than who ultimately
receives the income." Vercio v. Commissioner, 73 T.C. 1246, 1253
(1980) (service income assigned to trust). The owners of land
may be different from the owners of a business located on the
land. See Crawford v. Commissioner, T.C. Memo. 1984-433 (land
and farm separate); Blunt v. Commissioner, T.C. Memo. 1966-280
(separating mortuary business from land).
To decide when a transfer is complete for tax purposes, we
examine all the surrounding facts and circumstances, no single
one of which is controlling. Baird v. Commissioner, 68 T.C. 115,
124 (1977). The focus of our inquiry, however, is on when the
benefits and burdens of ownership have shifted. Id. Generally,
a transfer is complete upon the earlier of the transfer of title
or the shift of the benefits and burdens of ownership. Deyoe v.
Commissioner, 66 T.C. 904, 910 (1976) (citing Dettmers v.
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