- 61 -
II.D.3.c. and d. (discussing Estate of Weinert v. Commissioner,
294 F.2d 750 (5th Cir. 1961), and Estate of Durkin v.
Commissioner, supra, respectively). Furthermore, when a taxpayer
seeks to disavow its own tax return treatment of a transaction by
asserting the priority of substance only after the Commissioner
raises questions with respect thereto, this Court need not
entertain the taxpayer's assertion of the priority of substance.
See, e.g., Legg v. Commissioner, 57 T.C. 164, 169 (1971), affd.
per curiam 496 F.2d 1179 (9th Cir. 1974).
In Legg, the taxpayers sold an apple orchard for $140,000,
received a downpayment of $20,000 and an installment obligation,
and elected to report the transaction on the installment method.
Id. at 167-168. Contemporaneously with that transaction, the
taxpayers executed an irrevocable trust, funded with the
installment obligation. Id. at 168. The Commissioner asserted
that the transfer of the installment obligation to the trust was
a disposition giving rise to gain. Id. The taxpayers argued to
(...continued)
The Bureau of Internal Revenue, with the
tremendous load it carries, must necessarily rely in
the vast majority of cases on what the taxpayer asserts
to be fact. The burden is on the taxpayer to see to it
that the form of business he has created for tax
purposes, and has asserted in his returns to be valid,
is in fact not a sham or unreal. If in fact it is
unreal, then it is not he but the Commissioner who
should have the sole power to sustain or disregard the
effect of the fiction since otherwise the opportunities
for manipulation of taxes are practically unchecked.
* * * [Maletis v. United States, 200 F.2d 97, 98 (9th
Cir. 1952).]
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