Leonard Greene and Joyce Greene v. The United States of America

Summary

The United States District Court for the Southern District of New York considers cross-motions for summary judgment in a tax refund action involving charitable contributions of commodities futures contracts. The court addresses collateral estoppel, the partial-interest limitation under 26 U.S.C. § 170(f)(3), and whether the marked-to-market provisions of 26 U.S.C. § 1256 require recognition of gain upon donation. The court concludes that the donations qualified as an undivided portion of the taxpayers' interests and that the government's statutory arguments were not barred by collateral estoppel.

Holdings

1. Collateral estoppel did not bar the government from litigating whether plaintiffs donated only a partial interest in the futures contracts because that issue was not actually decided in the prior Greene litigation.
2. Plaintiffs donated an undivided portion of their entire interest in the futures contracts—the portion representing long-term capital gain—and therefore were not barred from claiming a charitable deduction under 26 U.S.C. § 170(f)(3).
3. The marked-to-market provisions of 26 U.S.C. § 1256 did not require plaintiffs to recognize unrealized capital gain when they donated the futures contracts to the Institute.

Questions Presented

1. Whether collateral estoppel barred the government from litigating whether plaintiffs donated only partial interests in the futures contracts.
2. Whether plaintiffs' transfer of only the long-term-capital-gain portion of futures contracts constituted a contribution of an undivided portion of their entire interest eligible for a charitable deduction under 26 U.S.C. § 170(f)(3)(B)(ii).
3. Whether the marked-to-market provisions of 26 U.S.C. § 1256 required plaintiffs to recognize unrealized gain when they donated the futures contracts to charity.

Disposition

other