Diminution of Loss

Diminution of Loss.—Mere diminution of loss is neither gain, profit, nor income. Accordingly, one who in 1913 borrowed a sum of money to be repaid in German marks and who subsequently lost the money in a business transaction cannot be taxed on the curtailment of debt effected by using depreciated marks in 1921 to settle a liability of $798,144 for $113,688, the ''saving'' having been exceeded by a loss on the entire operation.52

52 Bowers v. Kerbaugh-Empire Co., 271 U.S. 170(1926).

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Last modified: June 9, 2014