- 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
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