1971)[1] was a United States income tax case, holding that an agreement between taxpayers and heirs of decedent—pursuant to which taxpayers received a joint life interest in income from the trust estate in return for the surrender of stock allegedly given to them by the decedent—was actually a compromise of the taxpayers' disputed right to the stock, and since they claimed the stock as donees, they were to be treated as having acquired their life estate in that capacity for federal income tax purposes.

Appellees sought to amortize the value of the life estate in subsequent tax returns, which appellant Commissioner of Internal Revenue disallowed.

The Tax Court held for taxpayers on both issues, it reversed and allowed the amortization, finding that 26 U.S.C.

[3] The Tax Court held, and taxpayers contend, that Lyeth is inapplicable because taxpayers "sold or exchanged" the stock, to which they had bona fide claims of title through an alleged prior gift, for their life interest.

[4] Appellant Commissioner of Internal Revenue sought review of a decision of the Tax Court which reversed appellant's finding that appellee taxpayers were entitled to periodic amortization of the value of a life estate acquired from a decedent.