Unionbancal Corporation - Page 19




                                       - 19 -                                         

              to result, usually, in economically genuine realizations of             
              loss, and accordingly that Congress did not deem them to be             
              appropriate occasions for the allowance of deductions.                  
              * * *                                                                   
                  We conclude that the purpose of section 24(b) was to put            
              an end to the right of taxpayers to choose, by intra-family             
              transfers and other designated devices, their own time for              
              realizing tax losses on investments which, for most                     
              practical purposes, are continued uninterrupted. [Id. at                
              699-700; fn. ref. omitted.]                                             
              In sum, under section 267(a)(1), to the extent that a                   
         property sale between related taxpayers gives rise to an                     
         otherwise deductible loss to the seller, it is a loss that is                
         neither recognized nor allowed.  For purposes of this rule, it is            
         irrelevant whether the sale was bona fide.  “Congress obviously              
         did not want the courts to face the difficult task of looking                
         behind the sales.  Instead, Congress made its prohibition                    
         absolute in reach, believing that this would be fair to the great            
         majority of taxpayers.”  Miller v. Commissioner, 75 T.C. 182, 189            
         (1980).                                                                      
              In Turner Broad. Sys., Inc. & Subs. v. Commissioner, 111                
         T.C. 315, 332-333 (1998), we concluded that the special rules of             
         section 267(f) reflect an extension of the related party                     
         provisions of section 267(a)(1):                                             
                  The legislative history regarding section 267(f)                    
              indicates that it was intended to “extend” the related party            
              provisions of section 267 even though subsection (f)(2)(A)              
              makes subsections (a)(1) and (d) inapplicable.                          
              Nevertheless, there is a general theme that runs through the            
              gain recognition limitation in section 267(d) and the loss              
              deferral provisions of subsection (f) in that they both                 





Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011