United States v. Davis (1962)
| United States v. Davis | |
|---|---|
| Argued March 28, 1962 Decided June 4, 1962 | |
| Full case name | United States v. Thomas Crawley Davis, et al. |
| Citations | 370 U.S. 65 (more) 82 S. Ct. 1190; 8 L. Ed. 2d 335 |
| Case history | |
| Prior | Davis v. United States, 287 F.2d 168 (Ct. Cl. 1961); cert. granted, 368 U.S. 813 (1961). |
| Holding | |
| A taxpayer recognizes a gain on the transfer of appreciated property in satisfaction of a legal obligation | |
| Court membership | |
| |
| Case opinion | |
| Majority | Clark, joined by unanimous |
| Frankfurter, White took no part in the consideration or decision of the case. | |
Overruled by | |
| I.R.C. § 1041 | |
United States v. Davis, 370 U.S. 65 (1962), is a federal income tax case argued before the United States Supreme Court in 1962, holding 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.)