Lakeland Grocery Co. v. Commissioner
United States Board of Tax Appeals
The petitioner was insolvent but under a composition with creditors received from them a cancellation of their claims, after which the petitioner was solvent with net assets of $39,596.93 over and above all liabilities to creditors. Held, that the petitioner realized gain in the amount of the assets thereby freed from claims of creditors.
1Opinion of the Court
*290OPINION.
Harron:
The respondent made several adjustments of the taxpayer’s income for the taxable year 1933, but the only one in issue is his addition, to the petitioner’s income of $89,237.55 as “Profit arising from composition settlement.” This amount was determined by subtracting the total payment to creditors made in consideration of the composition, $15,472.61, from the total of debts which were canceled, $104,710.16. The petitioner claims that no “income” whatever was realized from the cancellation of indebtedness and the respondent, while contending that “income” was realized, concedes…
2Cases cited2 opinions
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- Helvering v. American Chicle Co.Supreme Court of the United States · 1934
3Cited by32 opinions
- Danenberg v. CommissionerUnited States Tax Court · 1979
- Lutz & Schramm Co. v. CommissionerUnited States Tax Court · 1943
- Estate of Delman v. CommissionerUnited States Tax Court · 1979
- Merkel v. CommissionerUnited States Tax Court · 1997
- Gershkowitz v. CommissionerUnited States Tax Court · 1987
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