Astoria Marine Constr. Co. v. Commissioner
United States Tax Court
A corporation, financially distressed, paid a creditor $ 500 in full settlement of notes for $ 26,000. The creditor accepted the settlement only because an investigation had convinced him that he could collect no more. (1) The difference of $ 25,500, held, not excludable from gross income as a gift under section 22 (b) (3), Internal Revenue Code.
Read the full summary
A corporation, financially distressed, paid a creditor $ 500 in full settlement of notes for $ 26,000. The creditor accepted the settlement only because an investigation had convinced him that he could collect no more. (1) The difference of $ 25,500, held, not excludable from gross income as a gift under section 22 (b) (3), Internal Revenue Code. Commissioner v. Jacobson, 336 U.S. 28. (2) On the evidence, held, that the corporation was insolvent before and after the compromise settlement, and hence no taxable income resulted from it. Dallas Transfer & Terminal Warehouse Co. v. Commissioner,…
1Opinion of the Court
OPINION.
Johnson, Judge:
Petitioner settled notes on which it was obligated to Watzek in the amount of $26,000 for a cash payment of $500. They were not purchase money notes, and petitioner bore no relation tothe seller other than that of debtor. Petitioner seeks to characterize the $20,000 loan, which was needed and used in constructing the vessel for the U. S. Coast and Geodetic Survey, as part of a transaction or venture on which it lost money. But such a view was considered and rejected by this Court in petitioner’s prior proceeding, Docket No. 1868, involving tax deficiencies for 1939. We…
2Cases cited3 opinions
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- Commissioner v. JacobsonSupreme Court of the United States · 1949
- Helvering v. American Chicle Co.Supreme Court of the United States · 1934
3Cited by2 opinions
- Stephen Babin Betty Boehm Babin v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1994
- Astoria Marine Constr. Co. v. CommissionerUnited States Tax Court · 1949