Gilbert Hahn, Jr. and Margot H. Hahn - Page 10

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          v. Commissioner, supra at 606 (citation omitted), this Court held           
          that “if * * * [a taxpayer] has received upon issuance of its               
          bonds an amount less than it paid for their retirement it has no            
          accession in assets but is in fact poorer by the transaction”.              
               Petitioner contends that he did not realize discharge of               
          indebtedness because, like the taxpayers in Rail Joint Co. and              
          Fashion Park, Inc., he “did not wind up with anything more than             
          what [he] had prior to the [transaction].”  Petitioner fails to             
          appreciate the holdings of those cases.                                     
               Rail Joint Co. and Fashion Park, Inc. were decided after the           
          Supreme Court’s decision in United States v. Kirby Lumber Co.,              
          supra.  In Kirby Lumber Co., a taxpayer issued bonds in the                 
          amount of $12,126,800 for which it received par value; i.e., the            
          issue price and par value were the same.  The taxpayer later                
          repurchased the bonds for less than par value.  The Supreme Court           
          held that the difference between the repurchase price and the par           
          value was income.  Id. at 2-3.                                              
               The taxpayers in Rail Joint Co. and Fashion Park, Inc., in             
          contrast, did not receive par value for the bonds they issued.              
          The face value of the bonds exceeded the amount the taxpayers               
          received when the bonds were issued.5  Because each taxpayer                

               5 In Commissioner v. Rail Joint Co., 61 F.2d 751 (2d Cir.              
          1932), affg. 22 B.T.A. 1277 (1931), the taxpayer distributed the            
          bonds to its shareholders as a dividend and, therefore, received            
          no proceeds in return.  In Fashion Park, Inc. v. Commissioner, 21           

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