Chemical National Bank of New York v. Commissioner

*182OPINION.

Seawell :

In this proceeding the petitioner contends that in computing its income tax liability for the year 1924 it is entitled to a deduction of $600,000, being the alleged difference between the cost to it of the notes of the Fruit Co. which it held and the fair market value of the second mortgage bonds of the Sugar Co. when received in exchange therefor.

The transaction by which the notes of the Fruit Co., executed by it and delivered to petitioner for the $1,500,000 loan made it, were exchanged for the second mortgage bonds of the Sugar Co., was one which might give rise to gain or…