Salvatore v. Commissioner
U.S. Tax Court
T.C. Memo 1970-30 (1970)
Susie Salvatore (plaintiff) inherited a gas-station property that her children operated; after she alone accepted Texaco's offer to buy the property, her family agreed she would transfer half her interest to her children, without consideration, so the sale proceeds could be split according to how much money the family estimated she needed for her remaining lifetime. Salvatore reported only half the sale proceeds as her capital gain, but the Commissioner of Internal Revenue (Commissioner) (defendant) determined the entire gain was taxable to her, and Salvatore petitioned the Tax Court for redetermination.
Whether the federal tax consequences of a property sale are determined by the substance, not the form, of the sale transaction.