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Commissioner v. P.G. Lake, Inc., 356 U.S. 260 (1958); (2) a
situation where no sale or exchange occurred (such as a
condemnation or taking), citing Commissioner v. Gillette Motor
Transp., Inc., 364 U.S. 130 (1960); (3) a situation where a
portion of the sale price of a debt instrument represents
original issue discount, citing United States v. Midland-Ross
Corp., 381 U.S. 54 (1965); and (4) the sale of a right to receive
payment in return for a taxpayer’s personal services (petitioners
provided no specific citation for this situation).
Petitioners contend that their situation does not fit within
those specific situations, and therefore the doctrine does not
apply to them. Respondent, on the other hand, contends that the
doctrine is a general principle that would apply to situations
where the property in question involved “a claim or right to
ordinary income.” Respondent, contrary to petitioners, contends
that Arkansas Best did not obviate or limit that principle (as
espoused in the above-referenced pre-Arkansas Best Supreme Court
holdings).
The Arkansas Best opinion is a major point of contention in
the parties’ arguments. Petitioners contend that the Supreme
Court, in attempting to clarify the interpretation of the term
“capital asset” that had evolved from the holding in Corn Prods.
Refining Co. v. Commissioner, 350 U.S. 46 (1955), decided that
the five categories of property excluded from capital gains
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