- 11 - later repurchased its bonds for an amount greater than the issue price, the taxpayers did not realize income and were, in fact, poorer by the transaction. In Fashion Park, Inc., this Court rejected the Commissioner’s argument that the holdings of Rail Joint Co. and Fashion Park, Inc. conflicted with Kirby Lumber Co., noting that “‘We have consistently * * * emphasized the issue price rather than par value in computing gain from the discharge of obligations.’” Fashion Park, Inc. v. Commissioner, supra at 606 (quoting Kramon Dev. Co. v. Commissioner, 3 T.C. 342, 349 (1944)); see also Rail Joint Co. v. Commissioner, supra at 752. The holdings in Rail Joint Co. and Fashion Park, Inc. are consistent with section 1.61-12(c)(3), Income Tax Regs., which provides: “If bonds are issued by a corporation and are subsequently repurchased by the corporation at a price which is exceeded by the issue price * * *, the amount of such excess is income for the taxable year.” In the instant case, petitioner did not issue bonds or other debt instruments at a discount. Accordingly, cases such as Rail Joint Co. and Fashion Park, Inc. are inapposite. The third case on which petitioner relies, Bradford v. Commissioner, supra, is also distinguishable. In Bradford, the 5(...continued) T.C. 600 (1954), the taxpayer originally issued $50 par preferred stock for $5 a share. In a tax-free reorganization, the company later issued $50 par value bonds in an exchange for the preferred stock. Id. at 601-603.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 NextLast modified: November 10, 2007