Johnson v. Comm'r, 21 T.C. 733 (Tax Ct. 1954). · Go Syfert
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Johnson v. Comm'r, 21 T.C. 733 (Tax Ct. 1954). Cases Citing This Book View Copy Cite
24 citation events across 5 distinct courts.
Strongest positive: Estate of Goldstein v. Commissioner (tax, 1958-02-21)
Treatment trajectory · 1954 → 2026 · click a year to view as-of
1954 1990 2026
Top citers, strongest first. 2 distinct citers. How cited ↗
discussed Cited "see" Estate of Goldstein v. Commissioner
Tax Ct. · 1958 · signal: see · confidence high
See and compare, however, LeSage v. Commissioner, supra, and George F. Johnson, supra. Any adjustment in the computation of gain realized by Harry from the sale of his partnership interest to William which results from the respondent’s determination of increased partnership net income for the period January 1 to April 21,1951, will be given effect in the computations under Rule 50.
discussed Cited "see" Estate of Goldstein v. Commissioner
Tax Ct. · 1958 · signal: see · confidence high
See and compare, however, LeSage v. Commissioner, supra, and George F. Johnson, supra. Any adjustment in the computation of gain realized by Harry from the sale of his partnership interest to William which results from the respondent’s determination of increased partnership net income for the period January 1 to April 21,1951, will be given effect in the computations under Rule 50.
Retrieving the full opinion text from the archive…
George F. Johnson and Marion D. Johnson
v.
Commissioner of Internal Revenue
Docket No. 36339.
United States Tax Court.
Feb 18, 1954.
21 T.C. 733
William J. Flynn, Esq ., and Rayford W. Lemley, Esq ., for the petitioners. Robert R. Veach, Esq ., for the respondent.
Opper.
Cited by 6 opinions  |  Published

OPINION.

Opper, Judge:

It is by now well settled that a withdrawing partner is chargeable with ordinary income on his share of the partnership profits, whether currently distributed or not, up to the time of his withdrawal. LeSage v. Commissioner, (C. A. 5) 173 F. 2d 826; Louis Karsch, 6 T. C. 1327. This is so notwithstanding that he sells his interest to the continuing partner.

Respondent has determined the deficiency here as though petitioner’s 50 per cent partnership interest terminated on May 20. The sole question is whether there was a termination of that 50 per cent interest at any earlier time.

That there was no change in the equal profit sharing ratio prior to the sale of petitioner’s interest is clear from petitioner’s own testimony.[1] And the purpose of restricting the drawing accounts in April was not to change the profit ratio but rather to make an interim agreement “until [as petitioner testified] we came to some settlement of selling out to one another.”

Nor was petitioner’s interest terminated at an earlier time.- It was not until May 20 or later that the identity and price of the partnership interest to be sold were settled. Only then did petitioner cease to be entitled to his full partnership earnings. LeSage v. Commissioner, supra.

Since petitioner no longer contests the figure to be used as net partnership income, we find no error in the deficiency.

Decision will he entered for the respondent.

1

CROSS-EXAMINATION

By Mr. Veach (respondent’s eonnsel) :

Q. Did you or Mr. Japp at any time have any disagreements as to your profit-sharing ratio that you would not be 50-50 partenrs ?
A. No, we never had any.
Q. No, that is prior to the sale of your interest ’
A, That is right.