Kenan v. Commissioner
US Court Case / From Wikipedia, the free encyclopedia
In Kenan v. Commissioner, 114 F. 2d 217 (2d Cir. 1940),[1] the United States Court of Appeals for the Second Circuit provided a broad definition of the term "sale or exchange." The Kenan court reviewed the Commissioner's finding of a $367,687.12 deficiency in the income taxes of the trustees. The trustees or taxpayers contended "that the delivery of the securities of the trust estate to the legatee was a donative disposition of property . . . and that no gain was thereby realized." The court pointed out that "the trustees had the power to determine whether the claim should be satisfied [in cash or securities]." Thus, "[i]f it were satisfied by a cash payment securities might have been sold on which . . . a taxable gain would necessarily have been realized." The court found that "[t]he word 'exchange' does not necessarily have the connotation of a bilateral agreement which may be said to attach to the word 'sale.'" The court then held that the trustees or taxpayers had realized a gain when they used the securities to satisfy the claim on the estate.
Kenan v. Commissioner | |
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Court | United States Court of Appeals for the Second Circuit |
Decided | August 7, 1940 |
Citation(s) | 114 F. 2d 217 (2d Cir. 1940) |
Court membership | |
Judge(s) sitting | Thomas Walter Swan, Augustus Noble Hand, Harrie B. Chase |
Case opinions | |
Majority | Hand, joined by Swan, Chase |
Laws applied | |
Internal Revenue Code |