Discussion:Sec 267 Loss - Sale to party related to 1/2 of joint owners
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Discussion Forum Index --> Advanced Tax Questions --> Sec 267 Loss - Sale to party related to 1/2 of joint owners
Discussion Forum Index --> Tax Questions --> Sec 267 Loss - Sale to party related to 1/2 of joint owners
| 26 October 2009 | |
| If a husband and wife own property jointly and sell it to the daughter of ONE of them, do the disallowance rules apply to the entire loss? Does it matter if the property is owned as tenants in common as opposed to joint tenancy? | |
| 27 October 2009 | |
| The disallowance rules apply and it doesn't matter if it is tenants in common or joint tenancy. See Sections 267(c)(2) and (c)(4) IRC. | |
| 27 October 2009 | |
| My reading of 267(c)(4) says that a STEP daughter (non blood relative) would NOT be a related party. Also, 267 doesn't seem to address the question of joint ownership. Any other thoughts? | |
| 27 October 2009 | |
| Perhaps I'm reading too much into it, but as I read it (c)(2) provides that an individual owns his/her spouse's interest, and the daughter is a child of one of the spouses. | |
| 27 October 2009 | |
| I believe that (c)(2) is not applicable in this instance. We are not dealing with stock and 267(b)(1) only references (c)(4) which does not have an reattribution rule contained therein. I thought "reading too much into" something was my specialty! Thanks for your thoughts. | |
| 28 October 2009 | |
| I am reading that half of the loss would not be affected by sale to a person's stepchild. The other spouses half would be a related party loss (sold to their own child) and not allowed. | |
| 28 October 2009 | |
| Just to double check - the related persons rules for sales and exchanges are more narrowly defined than dependency rules.
Sec. 267.(c)(4) The family of an individual shall include only his brothers and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants;
The way it is written implies a biological-basis rather that a sociological-basis. Thus are we safe to assume that: 1. An adopted child is not related to his adoptive parent. 2. An adopted child is not related to his adoptive parent's children. 3. The children of an adopted person are not related to the adopted person's parents.
5. A foster child is not related to his foster parent's children. 6. The children of a person are not related to the foster person's parents.
8. A step child is not related to his step-parent's children. 9. The children of a person are not related to the person's step parents. | |
| 28 October 2009 | |
| I found some research that suggests that I can do what I want to, i.e. take 1/2 of the loss in the above-described situation. The following case was cited as authority for the position in case anyone's interested. N.P. Van Valkenburgh v Commr, 26 TCM 753, Dec. 28,562(M), TC Memo. 1967-162; Rev. Rul. 53-121, 1953-2 CB 209; W. Simister, Jr. v Commr, 4 TC 470, Dec. 14,274 (1944) (Acq.).
Further, filing a joint return apparently does not prevent the application of this rule either. J.H. DeBoer v Commr, 16 TC 662, Dec. 18,184 (1951) (Nonacq.), aff'd, per curiam, CA-2, 52-1 USTC ΒΆ9218, 194 F2d 289. I found this research in the CCH Tax Research Consultant for those of you who are interested. Also, I believe Eastern raises some good points regarding the application of the related party rule in this case. I didn't look specifically for that point however, since I already knew my step child (not adopted) could not be considered related. Thanks for all the input gang! | |
