Electro-Chemical Engraving Co., Inc. v. Commissioner, 311 U.S. 513 (1941)

U.S. Supreme Court

Electro-Chemical Engraving Co., Inc. v. Commissioner, 311 U.S. 513 (1941) Electro-Chemical Engraving Co., Inc. v.

Commissioner of Internal Revenue

No. 62

Argued December 12, 1940

Decided January 6, 1941

311 U.S. 513

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

A loss sustained by a corporation upon foreclosure sale of its mortgaged property held, in computing taxable income under the Revenue Act of 1934, deductible only to the limited extent allowed by §§ 23(j) and 117(d) for losses from "sale" or exchanges of capital assets. Helvering v. Hammel, ante, p. 311 U. S. 504, followed. P. 311 U. S. 514.

110 F.2d 614 affirmed.

Certiorari, 310 U.S. 622, to review the reversal of a decision of the Board of Tax Appeals redetermining a deficiency in income tax.

MR. JUSTICE STONE delivered the opinion of the Court.

This is a companion case to Helvering v. Hammel, ante, p. 311 U. S. 504.

The question is whether the loss suffered by petitioner on foreclosure sale of his mortgaged property, acquired for profit, may be deducted in full from gross income, or only to the extent provided by § 117(d) of the 1934 Revenue Act. The statutory provisions involved are those of the 1934 Act relating to capital gains or losses, particularly "losses from sales or exchanges of capital assets," considered in the Hammel case, which are made applicable to petitioner, a corporation, by § 23(f), (j).

Page 311 U. S. 514

The Board of Tax Appeals ruled that petitioner's loss was deductible in full from its ordinary income. The Court of Appeals for the Second Circuit reversed the Board, 110 F.2d 614, holding that the loss sustained by petitioner was a loss from a sale of capital assets, § 23(j), which, under § 117(d), could be deducted from the gross income only to the extent of capital gains plus $2,000. We granted certiorari, 310 U.S. 622, so that the case might be considered with the conflicting decision of the Court of Appeals for the Sixth Circuit in the Hammel case, 108 F.2d 753. For the reasons stated in our opinion in the Hammel case, we think that this case was rightly decided below.

Affirmed.

MR. JUSTICE ROBERTS dissents.