Gilbert Hahn, Jr. and Margot H. Hahn - Page 9

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          time specified in the note.  Consequently, petitioner incurred a            
          liability for the related items.  When petitioner was released              
          from the liability, he realized an accession to income due to the           
          freeing of assets previously offset by the liability.  See Jelle            
          v. Commissioner, supra at 67.                                               
               Petitioner nevertheless urges a contrary result, relying               
          primarily on Commissioner v. Rail Joint Co., 61 F.2d 751 (2d Cir.           
          1932), affg. 22 B.T.A. 1277 (1931); Fashion Park, Inc. v.                   
          Commissioner, 21 T.C. 600 (1954); and Bradford v. Commissioner,             
          233 F.2d 935 (6th Cir. 1956), revg. 22 T.C. 1057 (1954).  Those             
          cases are distinguishable.                                                  
               Rail Joint Co. and Fashion Park, Inc. each involved a                  
          corporate taxpayer that had issued bonds and later repurchased              
          them for less than par (i.e., face) value.  The Commissioner                
          determined that each taxpayer had realized discharge of                     
          indebtedness income equal to the difference between the                     
          repurchase price of the bonds and their par value.  Commissioner            
          v. Rail Joint Co., supra at 751; Fashion Park, Inc. v.                      
          Commissioner, supra at 600.                                                 
               The court in each case held that the taxpayer had not                  
          realized income.  In Commissioner v. Rail Joint Co., supra at               
          752, the Court of Appeals for the Second Circuit reasoned that              
          the taxpayer “never received any increment to its assets * * * at           
          the time * * * [the bonds] were retired.”  In Fashion Park, Inc.            

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