Commissioner v. Tufts Case Brief

Why is the case important?

Respondent was a part of a general partnership formed to build a 120 unit apartment complex. A non-recourse loan was received in order to build the complex. However, the partnership was not able to cover the payment of the mortgage and had to sell of the building.

Facts of the case


Is the amount of the non-recourse mortgage considered gain when it exceeds the fair market value of the property?


Justice Blackmun issued the opinion for the Supreme Court of the United States in reversing the Court of Appeals and holding that Respondent must account for the proceeds of obligations that he has received tax-free and included in the basis.


The court determined that it was irrelevant that there was no economic benefit, since under the Internal Revenue Code, the value of the mortgage was relieved, and thus was a taxable benefit to respondents. In an opinion by Blackmun , J., expressing the unanimous view of the court, it was held that a taxpayer who sells property encumbered by a nonrecourse mortgage exceeding the fair market value of the property sold must include the unpaid balance of the mortgage in the computation of the amount the taxpayer realized on the sale.

  • Case Brief: 1983
  • Petitioner: Commissioner
  • Respondent: Tufts
  • Decided by: Burger Court

Citation: 461 US 300 (1983)
Argued: Nov 29, 1982
Decided: May 2, 1983