United States v. Davis (1962)

For other uses, see United States v. Davis.

United States v. Davis
Supreme Court of the United States
Argued March 28, 1962
Decided June 4, 1962
Full case nameUnited States v. Thomas Crawley Davis, et al.
Citations370 U.S. 65 (more)
82 S. Ct. 1190; 8 L. Ed. 2d 335
Case history
PriorDavis 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
Chief Justice
Earl Warren
Associate Justices
Hugo Black · Felix Frankfurter
William O. Douglas · Tom C. Clark
John M. Harlan II · William J. Brennan Jr.
Potter Stewart · Byron White
Case opinion
MajorityClark, 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.[1]

In 1984, "having heard criticism of the Davis/Farid rule for many years,"[2] 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.)[2]

  1. ^ United States v. Davis, 370 U.S. 65 (1962).
  2. ^ a b Chirelstein, Marvin (2005). Federal Income Taxation: A Law Student's Guide to the Leading Cases and Concepts (Tenth ed.). New York, NY: Foundation Press. p. 92. ISBN 1-58778-894-2.