Hugo Black

Name: Lusthaus v. Commissioner of Internal Revenue — Opinion of the Court
Author: Hugo Black

Lusthaus v. Commissioner of Internal Revenue…

Summary

“Lusthaus v. Commissioner of Internal Revenue — Opinion of the Court”, is a work by Hugo Black. It explores elements such as partnership, income and the Tax Court.

Quotes from Lusthaus v. Commissioner of Internal Revenue… (Hugo Black)

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ Management of a business which involves only the risk of the capital of another is not the control to which the Clifford case refers.
To us the evidence shows, without any contradiction, that in consummation of the husband's gift to the wife a valid partnership was created to which the federal tax acts are applicable. There is no finding and no evidence that the transaction was pretended or a sham, or that the husband in fact or in law retained any power to deprive the wife of any part of her contribution to the capital or her share of income derived from it. ”

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Source: Wikisource

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ Her husband paid his federal gift tax on the $50,000. The fact that the partnership 'brought about no real change in the economic relation of the husband and his wife to the income n question' cannot affect taxability any more in the present than in any other marital situation where individual incomes exist within the intimate family circle. When a stockholder in a corporation gives stock to his wife, the family's gross income remains the same. ”

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Source: Wikisource

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ Even if it were, we are pointed to no federal law of partnership which precludes the wife's becoming a partner with her husband and making her contribution to capital from money or property given to her by her husband, as well as from any other source. [2]
The Court's opinion does not hold that income of fusband and wife must be taxed as one. Congress has refused to do this although urged to do so. [3] It does not hold that a wife may not be a partner of her husband under some circumstances. ”

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Source: Wikisource

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ Two right steps do not make a wrong one. From these facts the intention to form a partnership must be inferred. Upon this record the tax advantage to the husband resulting from his gift of income producing property is lawful because the gift was lawful and therefore effective to bestow on the wife the income thereafter derived from property which was her own. ”

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Source: Wikisource

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ During the taxable year here involved the husband filed social security tax returns as owner of the business. Neither partner could sell or assign the interest ascribed by the partnership agreement without the other's written consent. Though, at the close of each year the profits of the business were credited on the books to petitioner and his wife equally, no withdrawals were to be made under the partnership agreement unless both partners agreed. The husband drew no salary. ”

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Source: Wikisource

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ But as we read the Court's opinion, it decides that a wife may not become a partner of her husband for federal income tax purposes, if the husband gives to her, directly or indirectly, the capital to finance her part of the partnership investment unless she also substantially participates in the management of the business or otherwise performs vital additional services. ”

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Source: Wikisource

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ The Court says, Tower opinion, 327 U.S. at pages 286, 287, 66 S.Ct. 535, that 'When the existence of an alleged partnership arrangement is challenged by outsiders, the question arises whether the partners really and truly intended to join together for the purpose of carrying on business and sharing in the profits or losses or both.' The suggestion seems to be that an inference of intention entirely contrary to all the primary facts may be deduced at will and without challenge by the Tax Court. People intend the consequences of their acts. ”

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Source: Wikisource

Hugo Black, Lusthaus v. Commissioner of Internal Revenue…

“ Uterhart v. United States, 240 U.S. 598, 603, 36 S.Ct. 417, 418, 60 L.Ed. 819.↑ Revenue Bill of 1941, H.R.5417, as introduced, 77th Cong., 1st Sess., Sec. 111; H.Rep.No.1040, 77th Cong., 1st Sess., p. 10 ”

Hugo Black

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