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Section 1001(b) defines the "amount realized" as "the sum of any
money received plus the fair market value of the property (other
than money) received." Section 1001(c) provides: "Except as
otherwise provided in this subtitle, the entire amount of the
gain or loss, determined under this section, on the sale or
exchange of property shall be recognized."
According to petitioner, section 1001(c) and section 1.1002-
1(b), Income Tax Regs., which provides that exceptions to the
general rule of section 1001(c) must be "strictly construed and
do not extend either beyond the words or the underlying
assumptions and purposes of the exception", compel the Court to
respect the tax consequences of a sale or exchange of property
regardless of the economic substance of the transaction.
Petitioner further asserts that the legislative history of
section 1001 reflects Congress' clear intent to tax the gain or
loss on all exchanges of property. Petitioner cites the
legislative history of section 203 of the Revenue Act of 1924,
ch. 234, 43 Stat. 253, which states:
It appears best to provide generally that gain or loss is
recognized from all exchanges and then except specifically
and in definite terms those cases of exchange in which it is
not desired to tax the gain or allow the loss. This results
in definiteness and accuracy and enables a taxpayer to
determine prior to the consummation of a given transaction
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