Hort v. Commissioner of Internal Revenue, No. 517
| Court | United States Supreme Court |
| Writing for the Court | MURPHY |
| Citation | 61 S.Ct. 757,85 L.Ed. 1168,313 U.S. 28 |
| Docket Number | No. 517 |
| Decision Date | 31 March 1941 |
| Parties | HORT v. COMMISSIONER OF INTERNAL REVENUE |
v.
COMMISSIONER OF INTERNAL REVENUE.
Messrs. Walter J. Rosston and Edwin Hort, both of New York City, for petitioner.
Mr. Richard H. Demuth, of Washington, D.C., for respondent.
Mr. Justice MURPHY delivered the opinion of the Court.
We must determine whether the amount petitioner received as consideration for cancellation of a lease of realty in New York City was ordinary gross income as
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defined in § 22(a) of the Revenue Act of 1932, 47 Stat. 169, 178, 26 U.S.C.A. Int.Rev.Acts, page 487, and whether in any event, petitioner sustained a loss through cancellation of the lease which is recognized in § 23(e) of the same Act, 47 Stat. 169, 180, 26 U.S.C.A. Int.Rev.Acts, page 490.
Petitioner acquired the property, a lot and ten-story office building, by devise from his father in 1928. At the time he became owner, the premises were leased to a firm which had sublet the main floor to the Irving Trust Co. In 1927, five years before the head lease expired, the Irving Trust Co. and petitioner's father executed a contract in which the latter agreed to lease the main floor and basement to the former for a term of fifteen years at an annual rental of $25,000, the term to commence at the expiration of the head lease.
In 1933, the Irving Trust Co. found it unprofitable to maintain a branch in petitioner's building. After some negotiations, petitioner and the Trust Co. agreed to cancel the lease in consideration of a payment to petitioner of $140,000. Petitioner did not include this amount in gross income in his income tax return for 1933. On the contrary, he reported a loss of $21,494.75 on the theory that the amount he received as consideration for the cancellation was $21,494.75 less than the difference between the present value of the unmatured rental payments and the fair rental value of the main floor and basement for the unexpired term of the lease. He did not deduct this figure, however, because he reported other losses in excess of gross income.
The Commissioner included the entire $140,000 in gross income, disallowed the asserted loss, made certain other adjustments not material here, and assessed a deficiency. The Board of Tax Appeals affirmed. 39 B.T.A. 922. The Circuit Court of Appeals affirmed per curiam on the authority of Warren Service Corp. v. Helvering, 2 Cir., 110 F.2d 723. 2 Cir., 112 F.2d 167. Because of conflict with Commissioner v. Langwell Real Estate Corp., 7 Cir., 47 F.2d 841, we
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granted certiorari limited to the question whether, 'in computing net gain or loss for income tax purposes, a taxpayer (can) offset the value of the lease canceled against the consideration received by him for the cancellation'. 311 U.S. 641, 61 S.Ct. 174, 85 L.Ed. —-.
Petitioner apparently contends that the amount received for cancellation of the lease was capital rather than ordinary income and that it was therefore subject to §§ 101, 111—113, and 117, 47 Stat. 169, 191, 195—202, 207, 26 U.S.C.A. Int.Rev.Acts, pages 504, 510—514, 524, which govern capital gains and losses. Further, he argues that even if that amount must be reported as ordinary gross income he sustained a loss which $23(e) authorizes him to deduct. We cannot agree.
The amount received by petitioner for cancellation of the lease must be included in his gross income in its entirety. Section 22(a), copied in the margin,1 expressly defines gross income to include 'gains, profits, and income derived from * * * rent, * * * or gains or profits and income from any source whatever'. Plainly this definition reached the rent paid prior to cancellation just as it would have embraced subsequent payments if the lease had never been canceled. It would have included a prepayment of the discounted value of unmatured rental payments whether received at the inception of the lease or at any time...
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...are concededly ‘property’ interests in the ordinary sense. * * * See also Corn Products Co. v. Commissioner, supra; Hort v. Commissioner, 313 U.S. 28. The instant case, on this issue, is not concerned with an attempted conversion of ordinary income into capital gain. Rather, this issue invo......
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Caruth v. US, Civ. A. No. 3-84-0877-R.
...right to the liquidation proceeds, they were required to recognize these liquidation proceeds as income. Accord, Hort v. Commissioner, 313 U.S. 28, 61 S.Ct. 757, 85 L.Ed. 1168 (1941); Commissioner v. P.G. Lake, Inc., 356 U.S. 260, 78 S.Ct. 691, 2 L.Ed.2d 743 (1958). However, in this case, a......
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Kenseth v. Comm'r of Internal Revenue, No. 2385–98.
...capital gain may be found in Commissioner v. P.G. Lake, Inc., 356 U.S. 260, 78 S.Ct. 691, 2 L.Ed.2d 743 (1958), and Hort v. Commissioner, 313 U.S. 28, 61 S.Ct. 757, 85 L.Ed. 1168 (1941). 64. To adopt another agricultural metaphor, a claim, lawsuit, or cause of action is, see Compact Oxford ......
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Principal Life Ins. Co. v. United States, No. 07-06T
...of related decisions. For example, PLIC cites Commissioner v. P.G. Lake, Inc., 356 U.S. 260 (1958) and Hort v. Comm'r of Internal Revenue, 313 U.S. 28 (1941), suggesting that the Supreme Court, in excluding property representing income items from the general definition of "capital asset," m......
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Hollywood Baseball Ass'n v. Comm'r of Internal Revenue, Docket No. 93647.
...are concededly ‘property’ interests in the ordinary sense. * * * See also Corn Products Co. v. Commissioner, supra; Hort v. Commissioner, 313 U.S. 28. The instant case, on this issue, is not concerned with an attempted conversion of ordinary income into capital gain. Rather, this issue invo......
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Caruth v. US, Civ. A. No. 3-84-0877-R.
...right to the liquidation proceeds, they were required to recognize these liquidation proceeds as income. Accord, Hort v. Commissioner, 313 U.S. 28, 61 S.Ct. 757, 85 L.Ed. 1168 (1941); Commissioner v. P.G. Lake, Inc., 356 U.S. 260, 78 S.Ct. 691, 2 L.Ed.2d 743 (1958). However, in this case, a......
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Kenseth v. Comm'r of Internal Revenue, No. 2385–98.
...capital gain may be found in Commissioner v. P.G. Lake, Inc., 356 U.S. 260, 78 S.Ct. 691, 2 L.Ed.2d 743 (1958), and Hort v. Commissioner, 313 U.S. 28, 61 S.Ct. 757, 85 L.Ed. 1168 (1941). 64. To adopt another agricultural metaphor, a claim, lawsuit, or cause of action is, see Compact Oxford ......
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Principal Life Ins. Co. v. United States, No. 07-06T
...of related decisions. For example, PLIC cites Commissioner v. P.G. Lake, Inc., 356 U.S. 260 (1958) and Hort v. Comm'r of Internal Revenue, 313 U.S. 28 (1941), suggesting that the Supreme Court, in excluding property representing income items from the general definition of "capital asset," m......