Estate of Ballantyne v. Commissioner

1. Who were the parties involved in the case? (plaintiff/defendant/respondent/petitioner)

Estate of Melvin W. Ballantyne (Deceased), Jean S. Ballantyne (Independent Executrix) and Jean S. Ballantyne v. Commissioner.

Russell E. Ballantyne and Clarice Ballantyne v. Commissioner

2. What were the facts in the case?

Melvin and his brother, Russell Ballantyne, formed an oral partnership. Which started out as a farming operation but grew into oil and gas exploration. Russell was in charge of the farming operation, while Melvin was in charge of the oil and gas exploration.

In practice and by mutual agreement the brothers withdrew profits from the partnership that were attributable to each of their respective business pursuits and paid the expenses related to each of their respective activities. In other words, Melvin kept the oil and gas income and paid those expenses, while Russell did the same with the farm income and expenses. However, for tax purposes Melvin and Russell each reported 50% of the partnerships total income, gains, losses, deductions, and credits on their individual federal tax returns.

When Melvin died, the partnership automatically dissolved and family relations also took a turn for the worse. A dispute later arose regarding tax liability and it was the contention of the IRS that there should be a 50-50 split with respect to tax treatment and distribution of the assets from the farming operation.

Russell argued that he alone was entitled to the benefits from the farming operation.

Is Russell correct in his contention that he alone should be entitled to the benefits from the partnership?

3. What was the Rule of Law in the case? (Rule of law the court applies to determine the rights of the parties)

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4.Who won the case? Why?

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