- 35 -
See also Newton Insert Co. v. Commissioner, 61 T.C. 570, 583
(1974) (Court reviewed), affd. per curiam 545 F.2d 1259 (9th Cir.
1976).
In addressing the provisions of section 1.1235-1(b), Income
Tax Regs., we stated:
We are aware that sec. 1.1235-1(b), Income Tax Regs.,
provides that if sec. 1235 does not apply because a
transfer is made to a related person, the tax
consequences of the transfer are to be determined under
other provisions of law. If that section of the
regulations is intended to imply that when a holder
transfers a patent and receives payments in the manner
described in sec. 1235(a), such payments may qualify
for capital gains treatment, the regulations must yield
to the contrary legislative purpose. [Poole v.
Commissioner, supra at 404 n.7.]
Were we to apply the foregoing case law to the facts of this
case, we would agree with respondent that the Leas are not
entitled to report the proceeds of the sale of the patents as
long-term capital gains. However, our inquiry cannot end here.
In Rev. Rul. 69-482, 1969-2 C.B. 164, the Commissioner
considered whether a taxpayer-holder who transferred a patent, in
whose hands it was a long-term capital asset, to a related party
for contingent amounts is precluded by reason of section 1235(d)
from obtaining long-term capital gains treatment of the proceeds
of such a transfer under provisions of law other than section
1235. In his consideration of this issue, the Commissioner
reviewed Poole v. Commissioner, supra, section 1.1235-1(b),
Income Tax Regs., and the legislative history pertaining to the
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011