South Carolina Continental Tel. Co. v. Commissioner
United States Tax Court
Held, that the transactions here involved between petitioner and the holder of all its outstanding old bonds did not constitute purchase and sale transactions, but an exchange or substitution of new bonds for old as evidence of a continuing indebtedness between the same parties; held, further, that the premium paid and unamortized discount and expense upon retirement of the old bonds in 1941 are not deductible in full in that year, but should be amortized over the life of…
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Held, that the transactions here involved between petitioner and the holder of all its outstanding old bonds did not constitute purchase and sale transactions, but an exchange or substitution of new bonds for old as evidence of a continuing indebtedness between the same parties; held, further, that the premium paid and unamortized discount and expense upon retirement of the old bonds in 1941 are not deductible in full in that year, but should be amortized over the life of the new bonds issued in exchange for the old.
1Opinion of the Court
OPINION.
Tyson, Judge:
The first assignment of error presents the only remaining issue for our redetermination. The parties are in agreement as to the principles of law applicable to that issue, viz., that, generally, where an outstanding issue of bonds is retired for cash, even though the cash is obtained by the sale of a new issue of bonds, the premium paid upon the retirement and the unamortized discount and expenses of the old bonds are deductible in the year of retirement,1 but that where an outstanding issue of bonds is retired by an exchange Or substitution of old bonds for new, those…
2Cases cited3 opinions
- Great Western Power Co. v. Commissioner of Internal RevenueSupreme Court of the United States · 1936
- Congress Square Hotel Co. v. CommissionerUnited States Tax Court · 1945
- Southern Cailfornia Edison Co. v. CommissionerUnited States Tax Court · 1944
3Cited by1 opinion
- South Carolina Continental Tel. Co. v. CommissionerUnited States Tax Court · 1948