Court Opinion

ID: 4483244
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:15:59.026544+00
Date Added: 2024-06-11T14:54:03.067371
License: Public Domain

Sterrett, J., concurring: I concur that the full amount of the nonrecourse debt constitutes an amount realized in spite of the fact that the value of the property is less than the amount of the debt. The crux of Crane v. Commissioner, 331 U.S. 1 (1947), is that the taxpayer received a benefit at least equal to the nonrecourse debt. However, the Supreme Court noted that "Obviously, if the value of the property is less than the amount of the mortgage, a mortgagor who is not personally liable cannot realize a benefit equal to the mortgage.” Crane v. Commissioner, supra n. 37. Adherence to the Crane doctrine increases petitioners’ basis in their stock, allowing them the benefit of large tax losses from their small business corporation without realizing income when their stock is foreclosed upon. The tax law must not be construed in a vacuum. Petitioners have received a tax benefit of economic substance attributable to the use of their Crane basis. When the property is disposed of, petitioners must account for these deductions. Wiles, J., agrees with this concurring opinion.