Decision on the Subsequent Taxation of Income from a Sole Proprietorship

Facts

A. and B. [X.] operate a restaurant in [Y.] . In the subsequent taxation procedure for the year 2000, a taxable asset increase of CHF 53,000.- was assumed for the federal and direct federal taxes, as a business debt of the taxpayers had been resolved by the end of 2000 through a waiver of claims by the creditor (mother or mother-in-law of the taxpayers). The spouses [X.] unsuccessfully filed an objection and appeal against the subsequent taxation.

Considerations

The Federal Court annuls the judgments of the Administrative Court of the Canton of Appenzell Ausserrhoden and remands the cases to the cantonal tax administration for a new assessment in accordance with the considerations, and to the Administrative Court for a new assessment of the cost consequences of the cantonal proceedings. The Federal Court considers the waiver of claims by the mother or mother-in-law of the appellants as tax-free, as it is a gift between close relatives. The requirements for a subsequent…