Marlborough House, Inc. v. Commissioner

X corporation erected an apartment building in 1927 and issued its bonds in the amount of $500,000, secured by a mortgage on this property. In 1932 X defaulted on these bonds and a bondholders' protective committee was formed under a deposit agreement which gave it broad powers. This committee instructed the trustee under the mortgage to foreclose, and at the foreclosure sale the committee bid in, with the bonds deposited with it plus cash, the property for $340,425. Thereafter the committee held and operated the property for several months and later transferred it to a new corporation, which…