Major Realty Corporation vs. Commissioner of Internal Revenue Service
Major Realty Corporation vs. Commissioner of Internal Revenue Service 749 F.2d. 1483 (11th Circuit, 1985)
The 11th Circuit reversed the U.S. Tax Court by finding that Major Realty Corporation’s sale in 1968 to the Edward J. DeBartolo Corporation of real property for $3,500,000.00 was a completed transaction for federal income tax purposes, and that the subsequent reversion of the property to Major Realty was due to a condition subsequent. The IRS argued that the transaction was not a completed sale, but rather an option to purchase the 175 acres. Major Realty’s sale to the Edward J. DeBartolo Corporation being deemed closed in 1968 allowed Major Realty to fully utilize expiring net operating loss carry-overs in excess of $3 million sheltering the gain from the sale while also increasing the tax basis in the 175 acres to $3,500,000.00.