Cottage Savings Association v. Commissioner of Internal Revenue

LIVELY, Senior Circuit Judge.

This appeal requires us to decide whether a savings association is entitled to a loss deduction under the Internal Revenue Code 1 as a result of “reciprocal sales” of depreciated mortgage loans to other thrift institutions. The Commissioner of Internal Revenue disallowed the deductions and asserted deficiencies in corporate income tax for the years 1974 through 1980. Upon petition for redetermination of deficiencies, the Tax Court found that the petitioner, Cottage Savings Association, realized losses in the years under review and that the losses are recognized…