United States v. Davis, 370 U.S. 65 (1962) is a federal income tax case argued before the United States Supreme Court in 1962. It is notable (and thus appears frequently in law school casebooks) for the following holding:
- Husband's transfer of appreciated stock to his wife, pursuant to property settlement agreement executed prior to divorce, constituted a taxable event; the husband's taxable gain was measured by the stock's value at the date of its transfer.
-
- This applies the general rule, that a taxpayer recognizes a gain on the transfer of appreciated property in satisfaction of a legal obligation.
In 1984, "having heard criticism of the Davis/Farid rule for many years," Congress overruled the main holding: Under §1041(a), no gain or loss shall be recognized by the transferor-spouse (or former spouse, but "only if the transfer is incident to divorce"); as a corollary, §1041(b) provides that transferor's basis shall carry over into the hands of the transferee-spouse. (Thus, for transfers between spouses, §1041(b) overrules the lower-of-cost-or-market rule for determining loss on subsequent sale of a gift, in §1015.)
- While this statute overrules the specific holding of Davis, it does not change the general rule—that "a taxpayer recognizes a gain on the transfer of appreciated property in satisfaction of a legal obligation."
Read more about United States V. Davis: Facts, Holding, Overruled By Congress, See Also
Famous quotes containing the words united states, united, states and/or davis:
“The United States have a coffle of four millions of slaves. They are determined to keep them in this condition; and Massachusetts is one of the confederated overseers to prevent their escape.”
—Henry David Thoreau (1817–1862)
“It was evident that, both on account of the feudal system and the aristocratic government, a private man was not worth so much in Canada as in the United States; and, if your wealth in any measure consists in manliness, in originality and independence, you had better stay here. How could a peaceable, freethinking man live neighbor to the Forty-ninth Regiment? A New-Englander would naturally be a bad citizen, probably a rebel, there,—certainly if he were already a rebel at home.”
—Henry David Thoreau (1817–1862)
“It is impossible for a stranger traveling through the United States to tell from the appearance of the people or the country whether he is in Toledo, Ohio, or Portland, Oregon. Ninety million Americans cut their hair in the same way, eat each morning exactly the same breakfast, tie up the small girls’ curls with precisely the same kind of ribbon fashioned into bows exactly alike; and in every way all try to look and act as much like all the others as they can.”
—Alfred Harmsworth, Lord Northcliffe (1865–1922)
“Night is a curious child, wandering
Between earth and sky, creeping
In windows and doors, daubing
The entire neighborhood
With purple paint.”
—Frank Marshall Davis (b. 1905)