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United States, 110 F.2d 887 (1st Cir. 1940). While their goal
was to receive income from the sale, as we held in Gunn v.
Commissioner, 49 T.C. 38, 56 (1967):
the word “income” in section 212(1) “is not to be given a
wholly literal reading. If a taxpayer sells * * * capital
assets, section 212(1) does not permit him to deduct
expenses of sale even though the sale produces a gain which
constitutes ‘gross income’,” See Spangler v. Commissioner,
323 F.2d 913, 921 (C.A. 9, 1963), where the court noted that
“Costs connected with the disposition of a capital asset are
also capital expenditures to be added to the taxpayer’s
basis, or offset against the sales price, rather than
expenses deductible from ordinary income.” * * *
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011