Louis Brandeis

“ In each case the debt, including the interest accrued, is paid. Where the stranger makes the purchase, the debt is discharged by a payment in cash; where the mortgagee purchases the property, the debt is discharged by means of a credit. The amount so credited to the mortgagor as interest paid would be available to him as a deduction in making his own income tax returns. [6] It would be strange if the sum deductible by the mortgagor debtor were not chargeable to the mortgage creditor as income received. ”

“ By Michigan law, it is said, the mortgagor is allowed one year from the date of the foreclosure sale within which he may redeem the property by paying to the purchaser the amount bid for the property plus interest from the time of the sale at the rate borne by the mortgage, even though the amount of such bid be less than the total amount of the mortgagee's investment in the property. ”

“ The exigencies of a tax determined on an annual basis may lead to the inclusion as income of items which might be shown to involve no gain if the transactions were viewed as a whole over several years. ”

“ There is nothing unfamiliar in taxing on the basis of the legal effect of a transaction. Income may be realized upon a change in the nature of legal rights held, though the particular taxpayer has enjoyed no addition to his economic worth. ”

“ We granted certiorari because of conflict with Helvering v. Missouri State Life Ins. Co., 78 F. (2d) 778, and National Life Ins. Co. v. United States, 4 F.Supp. 1000.
The following additional facts stipulated were adopted by the Board of Tax Appeals as its findings: The company kept its books on a 'calendar year' 'cash receipts and disbursements' basis, entering only payments of interest actually made to it during the year. ”