Electro-Chemical Engraving Company v. Commissioner of Internal Revenue/Opinion of the Court

by Harlan F. Stone

United States Supreme Court

311 U.S. 513

Electro-Chemical Engraving Company  v.  Commissioner of Internal Revenue

 Argued: Dec. 12, 1940. --- Decided: Jan 6, 1941

This is a companion case to Helvering v. Hammel, 311 U.S. 504, 61 S.Ct. 368, 85 L.Ed. 303, decided this day.

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, 26 U.S.C.A. Int.Rev.Acts, page 708. 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), 26 U.S.C.A. Int.Rev.Acts, pages 672, 673.

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, 60 S.Ct. 1097, 84 L.Ed. 1395, so that the case might be considered with the conflicting decision of the Court of Appeals for the Sixth Circuit in the Hammel case, Com'r of Internal Revenue v. Hammel, 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.

Notes