Commissioner v. Crichton

122 F.2d 181 (5th Cir. 1941)

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Nature of the Case

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Facts

Crichton’s (P) children transferred interests in real property. P and her three children, owned, in undivided interests, a tract of unimproved country land and an improved city lot. The children transferred to P their undivided interest in the city lot. P transferred to her children, as of equal value, an undivided 3/12 interest in the 'oil, gas and other minerals, in, on and under, and that may be produced from' the country land. The 1/2 interest conveyed to P had a value of $15,357.77. The interest P transferred to her children had a cost basis of zero. P treated the exchange as property for property and did not report the profit therefrom. The IRS contended that P had made a gain of the $15,357.77 and assessed her based on that amount. The Board found that the exchange was solely in kind and reduced the tax assessment substantially.