Frank Murphy

“ Section 117 (d) of the Revenue Act of 1934, 48 Stat. 680, 26 U.S.C.A.Int.Rev.Acts, page 708, provides in part: 'Losses from sales or exchanges of capital assets shall be allowed only to the extent of $2,000 plus the gains from such sales or exchanges.' Thus, the single question is whether the amount respondent received from the insurance company derived from the 'sale or exchange' of a capital asset.
Generally speaking, the language in the Revenue Act, just as in any statute, is to be given its ordinary meaning, and the words 'sale' and 'exchange' are not to be read any differently. ”

“ Neither term is appropriate to characterize the demolition of property and subsequent compensation for its loss by an insurance company. Plainly that pair of events was not a sale. Nor can they be regarded as an exchange, for 'exchange', as used in § 117 (d) , implies reciprocal transfers of capital assets, not a single transfer to compensate for the destruction of the transferee's asset. ”

“ The prompt withdrawal of Article 113 (a) (9) (1) of Treasury Regulations No. 86 (see T.D. 4698, XV-2 Cum.Bull. 159) indicates that the administrators charged with the enforcement of § 112 (f) reached a similar conclusion. ”