McWilliams v. Commissioner

John P. McWilliams (plaintiff), managing both his own and his wife's estates, instructed his broker in 1940 and 1941 to sell securities from one spouse's account to the other through the stock exchange specifically to generate deductible tax losses, though the identity of the actual buyers and sellers on the exchange was never known and the buying spouse never received the exact certificates the selling spouse had sold. The Commissioner (defendant) disallowed the resulting loss deductions under Section 24(b), which bars deductions for losses on sales between family members; the Tax Court sided with McWilliams, but the Court of Appeals reversed, and the Supreme Court granted certiorari.