Cole v. Commissioner
United States Board of Tax Appeals
On January 30, 1935, a creditor canceled petitioner's note, with the result that petitioner's status changed from insolvency to solvency. Under rule of Lakeland Grocery Co.,36 B.T.A. 289, petitioner realized taxable gain in the amount of the value of assets freed from claims of creditors. The amount of such gain depends upon whether or not petitioner's equity in life insurance policies is includable in assets.
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On January 30, 1935, a creditor canceled petitioner's note, with the result that petitioner's status changed from insolvency to solvency. Under rule of Lakeland Grocery Co.,36 B.T.A. 289, petitioner realized taxable gain in the amount of the value of assets freed from claims of creditors. The amount of such gain depends upon whether or not petitioner's equity in life insurance policies is includable in assets. Held, that the equity in insurance is not includable in assets because it is exempt from claims of creditors under local law. sec. 55(a), Insurance Law of New York; In re Messinger, 29…
1Opinion of the Court
*1112OPINION.
Haeeon :
The sole question is whether the cancellation of petitioner’s indebtedness to Hupp resulted in taxable income under section 22 (a) of the Eevenue Act of 1934, the pertinent provisions of which are set forth in the margin.1
Eespondent determined that the entire amount of the indebtedness canceled was taxable income under section 22 (a). In his brief petitioner contends that, since he was insolvent immediately prior to the cancellation of the indebtedness, the cancellation did not result in taxable income, and relies on Dallas Transfer & Terminal Warehouse Co. v. Commissioner, 70…
2Cases cited2 opinions
- Helvering v. American Chicle Co.Supreme Court of the United States · 1934
- Underleak v. ScottSupreme Court of Minnesota · 1912
3Cited by12 opinions
- Davis v. CommissionerUnited States Tax Court · 1978
- Carlson v. CommissionerUnited States Tax Court · 2001
- Hunt v. CommissionerUnited States Tax Court · 1989
- American Dental Co. v. CommissionerUnited States Board of Tax Appeals · 1941
- Babin v. CommissionerUnited States Tax Court · 1992
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