Commissioner v. Bollinger

485 U. S. 340

March 22, 1988

Jesse Bollinger operated a bunch of apartments in Lexington, Kentucky. To get around some weird lending laws, he set up a corporation, owned entirely by him, which would have title to the properties. However, virtually all other business involving the properties would be carried on by Bollinger’s various partnerships. The corporation was explicitly described as an agent of the partnerships, and many other businesses which dealt with Bollinger’s partnerships didn’t even know about the corporation. The question was whether Bollinger or the corporation owned the properties for tax purposes.

Unanimously, the Court said that Bollinger did (Kennedy did not participate). Usually, a corporation that holds property as an agent for someone else is not considered the owner for tax purposes. The IRS contended that this rule did not apply given that Bollinger was the sole stockholder of the corporation, and that agency could legally be doubted in such situations. Scalia dug through some boring cases from the 1940s which suggested as much. But Scalia cared more about the facts of the instant case, and factually, the corporation’s nature as a total agent was crystal clear. He thus declined to find the rigid and overbroad tests from the old cases to be controlling law.

Once again, an IRS case ended up unanimous. The Supreme Court really does seem to hate tax law as much as many law students do. In a complicated case, they tend to say “yeah, we’ll just go with whatever the lower court thought.” In any event, I kind of liked this ruling. Between it handing the IRS a loss, and it privileging the facts over arbitrary judicial tests, it was a good one.


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