Yankey v. Commissioner

BRATTON, Circuit Judge.

The question presented for determination is whether the gain derived by petitioners respectively in connection with the surrender of certain shares of preferred stock was taxable under section 115(c) and (i) of the Revenue Act of 1936, 49 Stat. 1648, 26 U.S.C.A. Int.Rev.Acts, pages 868, 871, on the basis of one hundred per cent of the gain realized, or under section 117 (a) on the basis of a fixed proportion of the gain.

The facts are not in issue. El Dorado Refining Company, a corporation organized under the laws of Delaware, was in default on its debenture notes. A…