United States v. Kirby Lumber Co, No. 26

CourtUnited States Supreme Court
Writing for the CourtHOLMES
PartiesUNITED STATES v. KIRBY LUMBER CO
Decision Date02 November 1931
Docket NumberNo. 26

284 U.S. 1
52 S.Ct. 4
76 L.Ed. 131
UNITED STATES

v.

KIRBY LUMBER CO.

No. 26.
Argued Oct. 21, 1931.
Decided Nov. 2, 1931.

The Attorney General and Mr. Charles B. Rugg, Asst. Atty. Gen., for the United States.

Mr. Robert Ash, of Washington, D. C., for respondent.

Page 2

Mr. Justice HOLMES delivered the opinion of the court.

In July, 1923, the plaintiff, the Kirby Lumber Company, issued its own bonds for $12,126,800 for which it received their par value. Later in the same year it purchased in the open market some of the same bonds at less than par, the difference of price being $137,521.30. The question is whether this difference is a taxable gain or income of the plaintiff for the year 1923. By the Rev-

Page 3

enue Act of (November 23) 1921, c. 136, § 213(a), 42 Stat. 238, gross income includes 'gains or profits and income derived from any source whatever,' and by the Treasury Regulations authorized by § 1303 (26 USCA § 1245), that have been in force through repeated re-enactments, 'If the corporation purchases and retires any of such bonds at a price less than the issuing price or face value, the excess of the issuing price or face value over the purchase price is gain or income for the taxable year.' Article 545(1)(c) of Regulations 62, under Revenue Act of 1921. See Article 544(1)(c) of Regulations 45, under Revenue Act of 1918; Article 545(1)(c) of Regulations 65, under Revenue Act of 1924; Article 545(1)(c) of Regulations 69, under Revenue Act of 1926; Article 68(1) (c) of Regulations 74, under Revenue Act of 1928. We see no reason why the Regulations should not be accepted as a correct statement of the law.

In Bowers v. Kerbaugh-Empire Co., 271 U. S. 170, 46 S. Ct. 449, 70 L. Ed. 886, the defendant in error owned the stock of another company that had borrowed money repayable in marks or their equivalent for an enterprise that failed. At the time of payment the marks had fallen in value, which so far as it went was a gain for the defendant in error, and it was contended by the plaintiff in error that the gain was taxable income. But the transaction as a whole was a loss, and the contention was denied. Here there was no shrinkage of assets and the taxpayer made a clear gain. As a result of its dealings it made available $137,521.30 assets previously offset by the obligation of bonds now extinct. We see nothing to be gained by the discussion of judicial definitions. The defendant in error has realized within the year an...

To continue reading

Request your trial
402 practice notes
  • Title Ins. Co. of Minnesota v. State Bd. of Equalization, No. A045664
    • United States
    • California Court of Appeals
    • June 24, 1991
    ...income is quite expansive. Treating income in [8 Cal.App.4th 1374] its "plain popular meaning" (United States v. Kirby Lumber Co. (1931) 284 U.S. 1, 3, 52 S.Ct. 4, 4, 76 L.Ed. 131), the United States Supreme Court "has given a liberal construction to this broad phraseology in recognition of......
  • Tabor v. Davis (In re Davis), Case No. 05-15794-L
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Tennessee
    • June 14, 2016
    ...trustee in bankruptcy by subrogation are enforceable for the benefit of the estate, and thus for the benefit of all creditors. Id. at 5, 52 S. Ct. at 4. This result was codified in the Bankruptcy Code of 1978, in which Congress specifically rejected limiting the estate's recovery to the amo......
  • Nathel v. Comm'r Of Internal Revenue, Docket No. 09-1955-ag.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • June 2, 2010
    ...as the capital of the corporation taxed.” Id. Macomber's limited definition of income was expanded in United States v. Kirby Lumber Co., 284 U.S. 1, 3, 52 S.Ct. 4, 76 L.Ed. 131 (1931) (finding that discharge of indebtedness caused the corporation taxpayer to realize an “accession to income”......
  • James v. United States, No. 63
    • United States
    • United States Supreme Court
    • May 15, 1961
    ...for, substantive tax law concepts solidly entrenched in our prior decisions. Since our landmark case of United States v. Kirby Lumber Co., 284 U.S. 1, 52 S.Ct. 4, 76 L.Ed. 131, it has been settled that, upon a discharge of indebtedness by an event other than full repayment, the debtor reali......
  • Request a trial to view additional results
401 cases
  • Title Ins. Co. of Minnesota v. State Bd. of Equalization, No. A045664
    • United States
    • California Court of Appeals
    • June 24, 1991
    ...income is quite expansive. Treating income in [8 Cal.App.4th 1374] its "plain popular meaning" (United States v. Kirby Lumber Co. (1931) 284 U.S. 1, 3, 52 S.Ct. 4, 4, 76 L.Ed. 131), the United States Supreme Court "has given a liberal construction to this broad phraseology in recognition of......
  • Tabor v. Davis (In re Davis), Case No. 05-15794-L
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Tennessee
    • June 14, 2016
    ...trustee in bankruptcy by subrogation are enforceable for the benefit of the estate, and thus for the benefit of all creditors. Id. at 5, 52 S. Ct. at 4. This result was codified in the Bankruptcy Code of 1978, in which Congress specifically rejected limiting the estate's recovery to the amo......
  • Nathel v. Comm'r Of Internal Revenue, Docket No. 09-1955-ag.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • June 2, 2010
    ...as the capital of the corporation taxed.” Id. Macomber's limited definition of income was expanded in United States v. Kirby Lumber Co., 284 U.S. 1, 3, 52 S.Ct. 4, 76 L.Ed. 131 (1931) (finding that discharge of indebtedness caused the corporation taxpayer to realize an “accession to income”......
  • James v. United States, No. 63
    • United States
    • United States Supreme Court
    • May 15, 1961
    ...for, substantive tax law concepts solidly entrenched in our prior decisions. Since our landmark case of United States v. Kirby Lumber Co., 284 U.S. 1, 52 S.Ct. 4, 76 L.Ed. 131, it has been settled that, upon a discharge of indebtedness by an event other than full repayment, the debtor reali......
  • Request a trial to view additional results
1 books & journal articles
  • Re-Examining First Day Trading Orders and Tax Status in Bankruptcy After Rodriguez.
    • United States
    • American Bankruptcy Law Journal Vol. 96 Nbr. 3, September 2022
    • September 22, 2022
    ...offsets the prior 10 years of $10 annual deductions. (156) Tufts, 461 U.S. at 317 (157) Id. (158) United States v. Kirby Lumber Co., 284 U.S. 1 (1931). The principle was subsequently codified under I.R.C. [section] (159) Tufts, 461 U.S. at 312-13 ("Moreover, this approach avoids the absurdi......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT