The taxpayer assigned a commission of $3.9 million that was to be paid on a deferred basis by a limited partnership in consideration for the taxpayer having helped secure $49 million in equity capital that was to be invested (largely on as deferred basis) in the limited partnership, which was slated to purchase an office tower property approximately six months later, to a Cayman Islands corporation that was an indirect shareholder and with which it did not deal at arm's length, for cash consideration of $41,300. It was assessed for Part XIII tax on the basis that the fair market value of the commission was $2,458,700.
In allowing the taxpayer's appeal, Bell T.C.J. noted that there was no signed agreement respecting the commission and apparently no oral agreement or understanding between the taxpayer and the limited partnership promoter as to the terms and conditions of such agreement, that the general partner of the partnership was without significant assets, that no commission would be payable until the partnership acquired the property and there was significant uncertainty as to whether such acquisition would occur.