CLIFTON INV. CO. V. COMMISSIONER
312 F.2d 719, cert. denied, 373 U.S. 921 (1963)
NATURE OF THE CASE: This was a dispute over a condemnation of property and the tax status
of the proceeds used to purchase a hotel. Clifton (P) challenged a Tax Court holding, which
entered judgment for the IRS (D) in a dispute over whether P was entitled to the
non-recognition of gain under 26 U.S.C.S. 1033(a)(3)(A).
FACTS: P was forced to sell his office building to the City of Cincinnati under threat of
eminent domain. P held the building for the production of income. P then used the funds from
the proceeds of that sale to purchase 80% of the Times Square Hotel of New York, an Ohio
corporation that as its sole asset had a contract to buy the Times Square Hotel of New York
City. The purchase of the hotel was affected by the corporation. The IRS did not view the
sale as a similar one or one related in service to use to the office building; thus it gave
no recognition under 1033(a)(3)(A). P contends that both properties were productive rental
income. The tax court agreed with the IRS.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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