Taxation of the Profit Shares of the Co-Heirs upon the Sale of Agricultural Properties

Facts

The appellants [A.A.] and [B.A.] acquired an agricultural homestead from their father in 1987. According to the transfer agreement at the time, the co-heirs had a right to a share of the profits for a period of 25 years. In 2006, the parties agreed on a relevant profit of CHF 5,650,000 from the development of the properties. In 2012, [A.A.] , as sole owner and real estate dealer, sold the building land parcels. The tax authorities included the co-heirs' profit shares in the employment income of [A.A.] . The appellants are challenging this assessment for the 2012 cantonal tax and direct federal tax.

Considerations

The Federal Court dismisses the appeal. [A.A.] as sole owner and seller of the properties is the sole taxable entity for the entire profit from the real estate sales. The co-heirs' profit shares are not business or professional expenses, but private debts of…