Commissioner of Internal Revenue v. The Bagley & Sewall Co.

Congress, in Section 23, prescribed the items which may be deducted in computing net income. In Section 23(g) (1), it provided that “losses from sales or exchanges of capital assets shall be allowed only to the extent provided in section 117.” Then, in Section 117, sub-paragraph (a) (1), Congress explicitly defined “capital assets” to mean “property held by the taxpayer (whether or not connected with his trade or business)”. Had Congress stopped there, perhaps it would be proper to do, as my colleagues do, i. e., to find in Section 23(a) (1) (A) and (f) exceptions to the definition contained…