Fred M. Vinson

“ We there said that the question whether the family partnership is real for income-tax purposes depends upon 'whether the partners really and truly intended to join together for the purpose of carrying on the business and sharing in the profits and losses or both. ”

“ The intent to provide money, goods, labor, or skill sometime in the future cannot meet the demands of §§ 11 and 22 (a) of the Code that he who presently earns the income through his own labor and skill and the utilization of his own capital be taxed therefor. The vagaries of human experience preclude reliance upon even good faith intent as to future conduct as a basis for the present taxation of income. [8]
Second. We turn next to a consideration of the Tax Court's approach to the family partnership problem. ”

“ The Tower case recognized that one's participation in control and management of the business is a circumstance indicating an intent to be a bona fide partner despite the fact that the capital contributed originated elsewhere in the family. [17] If the donee of property who then invests it in the family partnership exercises dominion and control over that property-and through that control influences the conduct of the partnership and the disposition of its income-he may well be a true partner. ”

“ The partnership sections of the Code are, of course, geared to the sections relating to taxation of individual income, since no tax is imposed upon partnership income as such. To hold that 'Individuals carrying on business in partnership' include persons who contribute nothing during the tax period would violate the first principle of income taxation: that income must be taxed to him who earns it. ”

“ This indicates a basic and erroneous assumption that one can never make a gift to a member of one's family without retaining the essentials of ownership, if the gift is then invested in a family partnership. ”

“ Commissioner, supra, as setting out two essential tests of partnership for income-tax purposes: that each partner contribute to the partnership either vital services or capital originating with him. Its decision was based upon a finding that none of respondent's sons had satisfied those requirements during the tax years in question. Sanction for the use of these 'tests' of partnership is sought in this paragraph from our opinion in the Tower case:
'There can be no question that a wife and a husband may, under certain circumstances, becomes partners for tax, as for other, purposes. ”

“ Respondent taxpayer is a rancher. From 1915 until October 1939, he had operated a cattle business in partnership with R. S.C.oon. Coon, who had numerous business interests in the Southwest and had largely financed the partnership, was 79 years old in 1939 and desired to dissolve the partnership because of ill health. To that end, the bulk of the partnership herd was sold until, in October of that year, only about 1,500 head remained. These cattle were all registered Herefords, the brood or foundation herd. Culbertson wished to keep these cattle and approached Coon with an offer of $65 a head. ”

“ Triers of fact are constantly called upon to determine the intent with which a person acted. [12] The Tax Court, for example, must make such a determination in every estate tax case in which it is contended that a transfer was made in contemplation of death, for 'The question, necessarily, is as to the state of mind of the donor.' United States v. ”

“ It assumes that there is no room for an honest difference of opinion as to whether the services or capital furnished by the alleged partner are of sufficient importance to justify his inclusion in the partnership. ”

“ On the other hand, one hardly becomes a partner in the conventional sense merely because he might have done so had he not been called.↑ Eisner v. Macomber, 1920, 252 U.S. 189, 207, 40 S.Ct. 189, 193, 64 L.Ed. ”