- 40 -
Commissioner, supra at 611-612, we stated:
Case law * * * sets forth the standard for deter-
mining when a sale is complete for tax purposes. With
respect to real property, a sale and transfer of owner-
ship is complete upon the earlier of the passage of
legal title or the practical assumption of the benefits
and burdens of ownership. See Major Realty Corp. &
Subs. v. Commissioner, 749 F.2d 1483, 1486 (11th Cir.
1985), affg. in part and revg. in part T.C. Memo. 1981-
361; Dettmers v. Commissioner, 430 F.2d 1019, 1023 (6th
Cir. 1970), affg. Estate of Johnston v. Commissioner,
51 T.C. 290 (1968); Baird v. Commissioner, 68 T.C. 115,
124 (1977). This test reaffirms the longstanding
principle, evidenced by the following early statement,
that transfer of legal title is not a prerequisite for
a completed sale: “A closed transaction for tax pur-
poses results from a contract of sale which is absolute
and unconditional on the part of the seller to deliver
to the buyer a deed upon payment of the consideration
and by which the purchaser secures immediate possession
and exercises all the rights of ownership.” Commis-
sioner v. Union Pac. R.R. Co., 86 F.2d 637, 639 (2d
Cir. 1936), affg. 32 B.T.A. 383 (1935).
In determining whether passage either of title or
of benefits and burdens has occurred, we look to State
law. It is State law that creates, and governs the
nature of, interests in property, with Federal law then
controlling the manner in which such interests are
taxed. See United States v. National Bank of Commerce,
472 U.S. 713, 722 (1985). Here, execution of the
contracts for deed was not accompanied by a transfer of
legal title, so we must decide whether these instru-
ments were sufficient under State law to confer upon
the purchaser the benefits and burdens of ownership.
This inquiry is a practical one to be resolved by
examining all of the surrounding facts and circum-
stances. * * *
Among the factors which this and other courts have
cited as indicative of the benefits and burdens of
ownership are: A right to possession; an obligation to
pay taxes, assessments, and charges against the prop-
erty; a responsibility for insuring the property; a
duty to maintain the property; a right to improve the
property without the seller’s consent; a bearing of the
risk of loss; and a right to obtain legal title at any
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