- 26 -
F.2d 1397, 1401 (9th Cir. 1993) (the parties and the Court of
Appeals for the Ninth Circuit treated water rights as property
rights protected by the Fifth Amendment); First Victoria Natl.
Bank v. United States, 620 F.2d 1096, 1106-1107 (5th Cir. 1980)
(rice production histories and rights to receive allotments of
rice, if and when issued, were treated as property rights
includable in a decedent's gross estate).
On this issue, we grant petitioners' motion for partial
summary judgment, and we deny respondent's motion for partial
summary judgment.
Sale or Exchange
If petitioners' water rights in Colorado River water are to
be treated as capital assets, petitioners and respondent cross-
move for partial summary judgment on the issue of whether, for
Federal income tax purposes, relinquishment of the water rights
by the partnership and receipt of $1,088,132 by the partnership
constituted a sale or exchange. Respondent contends that the
$1,088,132 was transferred to the partnership either for the
partnership’s commitment to indemnify HID for unexpected future
liabilities that might arise or as a mere windfall distribution
to the partnership of HID surplus funds.
The undisputed evidence establishes that the form and
substance of the transfers of funds that occurred at both levels
(from CAP to HID and from HID to the partnership) were based on
and occurred as a result of the partnership’s relinquishment or
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011