Commissioner of Internal Revenue v. Kitselman

EVANS, Circuit Judge.

This appeal raises the question of the de-ductibility of a loss claimed to have been allegedly sustained by a bondholding taxpayer in the alleged reorganization of a company with outstanding bonds. The taxpayer exchanged defaulted railroad mortgage bonds for a credit and stocks and bonds in a new company formed' to receive the assets of the debtor company, which were purchased at a sale on the foreclosure of the mortgage which secured the taxpayer’s bonds. In brief, liability depends upon whether there was effected such a statutory reorganization as is covered by section…