Zarin v. Commissioner
United States Tax Court
P, a compulsive gambler, gambled on credit extended by a New Jersey casino. During the following year, P and the casino settled the debt at a substantial discount. Held, the difference between the face amount of the debt and the amount for which it was settled constitutes income from the discharge of indebtedness. Sec. 61(a)(12), I.R.C. 1954.
1DissentTannenwald, J.
Zarin realized income in an amount equal to the amount of the credit extended to him because he was afforded the “opportunity to gamble.” Based upon that theory, the majority concludes that Mr. Zarin is seeking to reduce the amount of his loss and that this approach runs afoul of the now discredited (according to the majority) “diminution of loss” approach of the Supreme Court in Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926).
I find it unnecessary to rely on Kerbaugh-Empire and, therefore, need not embrace or reject the approach of that case. I am constrained to note, however, that it…
2Cases cited13 opinions
- Commissioner v. Glenshaw Glass Co.Supreme Court of the United States · 1955
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- Commissioner v. TuftsSupreme Court of the United States · 1983
- Bowers v. Kerbaugh-Empire Co.Supreme Court of the United States · 1926
- Flamingo Resort, Inc. v. United StatesCourt of Appeals for the Ninth Circuit · 1982
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