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At the calendar call of the session of the Court at which
this case was tried, respondent filed a motion in limine to
"exclude all evidence pertaining to an alleged oral modification
made to the written sale agreement * * * as inadmissible pursuant
to the principles espoused by the Tax Court in Estate of Durkin
v. Commissioner, 99 T.C. 561 (1992)"12 and by the Court of
Appeals for the Third Circuit in Commissioner v. Danielson, 378
F.2d 771 (3d Cir. 1967), vacating and remanding 44 T.C. 549
(1965). These cases stand, in respondent's view, for the
12In Estate of Durkin v. Commissioner, 99 T.C. 561 (1992),
the taxpayer decedent had not disclosed on his income tax return
his bargain purchase of assets from a closely held corporation,
and his bargain sale of his shares to the other shareholder, so
as not to report any gain. The Court rejected the argument of
his personal representative and surviving spouse that the
transactions were in substance a redemption or sale of his stock
at a capital gain, the Commissioner having discovered the bargain
purchase on audit and determined it to be a constructive
dividend. We found that decedent had not exhibited "an honest
and consistent respect for the substance of * * * [the]
transaction", Id. at 574 (quoting Estate of Weinert v.
Commissioner, 294 F.2d 750, 755 (5th Cir. 1961), revg. and
remanding 31 T.C. 918 (1959)). Decedent had reported the
transactions on his tax return consistently with the form in
which they were cast, and the effort of his successors in
interest to restructure the transaction to track its alleged
substance was a litigation strategy developed years later in
response to our previous opinion in Estate of Durkin v.
Commissioner, T.C. Memo. 1992-325, upholding the Commissioner's
determination that the value of the purchased assets
substantially exceeded the price paid by decedent. Moreover, the
Commissioner's challenge to the price paid by decedent to the
corporation did not open the door for the successors in interest
to disavow the form of the transactions: "To hold otherwise
would at a minimum be an untoward invitation to the kind of
mispricing and concealment that petitioners attempted here".
Estate of Durkin v. Commissioner, 99 T.C. at 575.
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