dissenting: I have serious doubts as to the correctness of the Court’s decision on the second issue. The question is whether there was a “sale” of “property” in respect of the share of negotiated compensation which petitioner received upon the advent of the two maj or league baseball clubs to California.
Granted that there were contractual arrangements that supported such payment, petitioner did not “sell” any “property” to those two clubs within the meaning of section 337, nor did they buy anything from petitioner. The $150,000 in issue was petitioner’s one-sixth share of a total payment of $900,000 made for the benefit of all six minor league teams. That payment was in a sense intended to compensate petitioner and the other five teams, in some measure, for anticipated losses or reduction in future income as a consequence of the expected shift in public interest in the California area away from the minor league to the major league games. This was not a payment for “property.” Petitioner did not sell its franchise to the major league clubs, for its team, as a result of an entirely different transaction, moved to Salt Lake City, where it continued to play minor league baseball. Certainly, the minor league teams outside of Los Angeles and San Francisco did not “sell” any “property” to the Dodgers or the Giants for their respective $150,000 shares, and I think that petitioner stands on no firmer foundation. Rot everything that is sold is “property.” Cf. Estate of Grace M. Scharf, 38 T.C. 15, affirmed 316 F. 2d 625 (C.A. 7). See also Miller v. Commissioner, 299 F. 2d 706, 709-710 (C.A. 2), affirming 35 T.C. 631; Commissioner v. Gillette Motor Transport, Inc., 364 U.S. 130, 134. And I am also satisfied that the transaction herein cannot fairly be characterized as a “sale.”
Section 337, upon which petitioner relies, grants an exemption from taxation and is not to be given an expansive reading. Plainly, the amount received would not qualify as proceeds of the sale of a capital asset under section 1221, and there is no reason to give the word “property” a broader meaning in section 337 than in section 1221. There is no justification for construing section 337 so as to allow nonrecognition of the gain in question at the corporate level and thus transmute what was ordinary income to the corporation into capital gain at the shareholder level.
The opinion of the Court places great, but I think false, emphasis upon “burden of proof” in respect of this issue. Whether the transaction, fully described in the evidence and findings, qualifies as a “sale” of “property” under the statute is a question of law, and the matter should not be obscured by reference to burden of proof. The latter is employed here as an improper crutch to support an erroneous result.
Tzetjens, PieRce, and Train, JJ., agree with this dissent.