Bush Terminal Bldgs. Co. v. Commissioner
United States Tax Court
1. In 1940 petitioner purchased a considerable amount of its own bonds at less than their face value. Held, amendment of section 22 (b) (9) of Revenue Act of 1939 made by Revenue Act of 1942 is not retroactive; held, further, the evidence does not establish that petitioner was "in an unsound financial condition" in 1940, and therefore gain resulting from the discharge of an indebtedness by purchase of its bonds is taxable to petitioner.
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1. In 1940 petitioner purchased a considerable amount of its own bonds at less than their face value. Held, amendment of section 22 (b) (9) of Revenue Act of 1939 made by Revenue Act of 1942 is not retroactive; held, further, the evidence does not establish that petitioner was "in an unsound financial condition" in 1940, and therefore gain resulting from the discharge of an indebtedness by purchase of its bonds is taxable to petitioner. Twin City Rapid Transit Co., 3 T. C. 475. 2. An affiliated corporation owed petitioner an account receivable in the amount of $ 1,614,819.98 as of December…
1Opinion of the Court
OPINION.
Bond Purchase Issue.
KeRN, Judge:
The first issue presented is whether respondent is in error in increasing petitioner’s taxable income for 1940 by $242,790.36 representing the difference between the face value ($681,000) of its own bonds purchased during that year by petitioner on the open market and the amount paid for them ($412,502.50) plus unamortized discount ($25,707.14).
The Revenue Act of 1939 added section 22 (b) (9) to the Internal Revenue Code. It excluded from taxation the income of a corporation attributable to the discharge of any indebtedness evidenced by a securityj if…
2Cases cited4 opinions
- Charles Ilfeld Co. v. HernandezSupreme Court of the United States · 1934
- McLaughlin v. Pacific Lumber Co.Supreme Court of the United States · 1934
- Southeastern Bldg. Corp. v. CommissionerUnited States Tax Court · 1944
- Record Realty Co. v. CommissionerUnited States Tax Court · 1946
3Cited by38 opinions
- Wendland v. CommissionerUnited States Tax Court · 1982
- Denver & R. G. W. R. Co. v. CommissionerUnited States Tax Court · 1962
- Gertz v. CommissionerUnited States Tax Court · 1975
- Mills Estate, Inc. v. CommissionerUnited States Tax Court · 1951
- National Starch & Chemical Corp. v. CommissionerUnited States Tax Court · 1989
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