B. F. Avery & Sons, Inc. v. Commissioner
United States Board of Tax Appeals
A solvent purchaser had taken manufacturing equipment and finished products into its accounts at the full price which it agreed to pay for these items. It gave notes in partial payment for these purchases.
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A solvent purchaser had taken manufacturing equipment and finished products into its accounts at the full price which it agreed to pay for these items. It gave notes in partial payment for these purchases. A number of years later some of the notes were canceled by the seller on account of defects in the manufacturing equipment and finished products furnished to the purchaser. ,Held, the face amount of the notes canceled should be taken into income in the year of the adjustment.
1Opinion of the Court
*1397OPINION.
Mukdock:
The petitioner argues, and we agree, that the adjustment on the notes was not made in settlement of damages for breach of contract. Thus, Farmers ds Merchants Bank of Catlettsburg v. *1398Commissioner, 59 Fed. (2d) 912, does not apply. Neither was it a gift. Cf. Rice, Barton & Fates v. Commissioner, 41 Fed. (2d) 339. Counsel for the petitioner has ably and forcefully set forth the arguments and authorities in support of the petitioner’s contentions. Yet, no case is cited which is directly in point. Many cases are cited where cancellation of debts was held not to result in income to…
2Cases cited4 opinions
- Burnet v. Sanford & Brooks Co.Supreme Court of the United States · 1931
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- Bowers v. Kerbaugh-Empire Co.Supreme Court of the United States · 1926
- Great Northern Ry. Co. v. LynchDistrict Court, D. Minnesota · 1921
3Cited by13 opinions
- Vukasovich, Inc. v. Commissioner of Internal Revenue, Vukasovich, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1986
- Montgomery v. CommissionerUnited States Tax Court · 1975
- Helvering v. Jane Holding CorporationCourt of Appeals for the Eighth Circuit · 1940
- Zarin v. CommissionerUnited States Tax Court · 1989
- Marbelite Corp. of America v. CommissionerUnited States Board of Tax Appeals · 1934
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