Court Opinion

ID: 4471017
Source: CourtListenerOpinion
Date Created: 2020-01-09 22:00:01.637556+00
Date Added: 2024-06-11T15:03:14.055581
License: Public Domain

Murdock, concurring: The bonds here in question were acquired in 1930, when they were received in exchange for the stock. The gain or loss upon the disposition of the stock should have been computed by taking the fair market value of the bonds as the amount realized upon the disposition of the stock. That same value of the bonds must be considered thereafter as the basis for gain or loss upon the bonds, otherwise there will be a possibility of double taxation or else an escape of taxation upon the disposition of the bonds. The fair market value of the bonds is regarded as the equivalent of cash for computing gain or loss on the disposition of the stock, and henceforth the bonds must be regarded for tax purposes as if they had been acquired for that much cash. For these reasons, the fair market value of the stock at the time it was given in exchange for the bonds is not regarded as the cost or basis of the bonds for income tax purposes. StebkhagsN, ¡/., agrees with the above.