James F. and Dorothy A. Davis - Page 10




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          Commissioner, supra.  In fact, we have previously concluded that            
          Ark. Best Corp. in no way affected the viability of the principle           
          established in the line of cases on which respondent relies.  See           
          Gladden v. Commissioner, 112 T.C. 209, 221 (1999), revd. on                 
          another issue 262 F.3d 851 (9th Cir. 2001); FNMA v. Commissioner,           
          100 T.C. 541, 573 n.30 (1993).7  We based that conclusion on                
          footnote 5 of the Supreme Court’s opinion in Ark. Best Corp.,               
          which states:                                                               
                    Petitioner [Ark. Best Corp.] mistakenly relies on                 
               cases in which this Court, in narrowly applying the                    
               general definition of “capital asset,” has “construed                  
               ‘capital asset’ to exclude property representing income                
               items or accretions to the value of a capital asset                    
               themselves properly attributable to income,” even                      
               though these items are property in the broad sense of                  
               the word.  United States v. Midland-Ross Corp., 381                    
               U.S. 54, 57 (1965).  See, e.g., Commissioner v. Gillet-                
               te Motor Co., 364 U.S. 130 (1960) (“capital asset” does                
               not include compensation awarded taxpayer that repre-                  
               sented fair rental value of its facilities); Commis-                   
               sioner v. P.G. Lake, Inc., 356 U.S. 260 (1958) (“capi-                 
               tal asset” does not include proceeds from sale of oil                  
               payment rights); Hort v. Commissioner, 313 U.S. 28                     
               (1941) (“capital asset” does not include payment to                    
               lessor for cancellation of unexpired portion of a                      
               lease).  This line of cases, based on the premise that                 
               � 1221 “property” does not include claims or rights to                 
               ordinary income, has no application in the present                     
               context.  Petitioner sold capital stock, not a claim to                
               ordinary income.  [Ark. Best Corp. v. Commissioner,                    
               supra at 217 n.5.]                                                     
               We have reviewed Hort v. Commissioner, supra; Commissioner             
          v. P.G. Lake, Inc., supra; Commissioner v. Gillette Motor                   


               7See also Wachner v. Commissioner, T.C. Memo. 1995-88; Clark           
          v. Commissioner, T.C. Memo. 1994-278.                                       





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