Fairbanks v. United States

Both courts below ruled that gain derived by the petitioner from redemption of bonds during 1927, 1928 and' 1929 was not “capital gain” within the meaning of the controlling statutes.

No contest now exists concerning the facts. The narrow point as counsel agree is this — Must the redemption of bonds before maturity by the issuing corporation be treated as tantamount to a sale or exchange of capital assets within the meaning of § 208 (a) (1), Revenue Act 1926, and § 101 (c) (1), Revenue Act 1928. 1

If redemption amounts to sale or exchange, the petitioner’s gain was subject to taxation at,the…