- 10 - 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 (continued...)Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 NextLast modified: November 10, 2007