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Intent, and Purpose in Federal Income Taxation”, 34 U. Chi. Law
Rev. 485, 544 (1967); cf. Recklitis v. Commissioner, 91 T.C. 874,
910 (1988) (the objective “badges” or indicia of fraud under sec.
6663); sec. 1.183-2(b), Income Tax Regs. (enumerating the
objective factors taken into account evidencing a profit motive).
The proper tax characterization cannot turn on the separate
intentions of multiple participants in an organization, since
each participant is apt to take a different view. Blum, supra at
539. Instead, motive or intent must be determined at the
institutional level, which necessarily requires an examination of
external factors. Therefore, we look to the objective facts and
circumstances surrounding the payment to determine whether the
members must or should be deemed to have an investment motive in
paying the transfer fees.
There is no preexisting checklist of objective factors that
can be used as a template for deciding if the payors have an
investment motive. Therefore, we look to other shareholder/club
member capital contribution cases to isolate the objective
factors that have tended to show an investment motive.
The transfer fees are similar to assessments paid by owners
of interests in a housing cooperative, because any assessment
paid by the cooperative owners can arguably be a charge for the
privilege of residing on the premises, just as, respondent
argues, the transfer fee should be considered merely another
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