Carman v. Commissioner

OPINION.

Hill, Judge:

In the transaction involving the exchange of petitioner’s old bonds for the securities and cash of the company under section 77 of the Bankruptcy Act, respondent contends that section 112 (b) (3) and (c) (1) of the Internal Revenue Code1 is not applicable because (1) the issuance of 116% shares of common stock by the company in 1944 for interest due petitioner as owner of old bonds from September 1, 1933, to December 31, 1938, constituted ordinary income to the extent of $3,590.06, less $2,132.55 attributable to the period prior to petitioner’s purchase of the old bonds…