Stanley Forman Reed

Name: Helvering v. American Dental Company — Opinion of the Court
Author: Stanley Forman Reed

Summary

“Helvering v. American Dental Company — Opinion of the Court”, is a work by Stanley Forman Reed. It explores elements such as indebtedness, cancellations and taxpayer.

Quotes from Helvering v. American Dental Company… (Stanley Forman Reed)

Stanley Forman Reed, Helvering v. American Dental Company…

“ The release of interest or the complete satisfaction of an indebtedness by partial payment by the voluntary act of the creditor is more akin to a reduction of sale price than to financial betterment through the purchase by a debtor of its bonds in an arms-length transaction. In this view, there is no substance in the Commissioner's differentiation between a solvent or insolvent corporation or the taxation of income to the extent of assets freed from the claims of creditors by a gratuitous cancellation of indebtedness. ”

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Source: Wikisource

Stanley Forman Reed, Helvering v. American Dental Company…

“ Cancellation of indebtedness.-The cancellation of indebtedness, in whole or in part, may result in the realization of income. If, for example, an individual performs services for a creditor, who in consideration thereof cancels the debt, income in the amount of the debt is realized by the debtor as compensation for his services. A taxpayer realizes income by the payment or purchase of his obligations at less than their face value. ”

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Source: Wikisource

Stanley Forman Reed, Helvering v. American Dental Company…

“ Normally cancellations of indebtedness occur only when the beneficiary is insolvent or at least in financial straits. Possibly because it seems beyond the legislative purpose to exact income taxes for savings on debts, the courts have been astute to avoid taxing every balance sheet improvement brought about through a debt reduction. Where the indebtedness has represented the purchase price of property, a partial forgiveness has been treated as a readjustment of the contract rather than a gain. ”

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Source: Wikisource

Stanley Forman Reed, Helvering v. American Dental Company…

“ The taxpayer sought a redetermination on the ground that the cancellations were exempt gifts and that it was not enriched beyond the tax advantages gained by the deductions in former tax returns. The Board of Tax Appeals found that the cancellations were not gifts, concluded that the tax benefits in dollars obtained by the deductions of former years did not limit the 1937 tax springing from the cancellation and affirmed the Commissioner's determination of deficiency. ”

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Source: Wikisource

Stanley Forman Reed, Helvering v. American Dental Company…

“ The Revenue Act of 1942, 56 Stat. 811, Section 114, 26 U.S.C.A. Int.Rev.Acts, amended Section 22 (b) (9) of the Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code § 22 (b) (9) , so as to make the exclusion from gross income of income arising from discharge of indebtedness applicable generally to all corporations, whether or not financially sound. [12]
In the light of these views upon gain, profit and income, we must construe the meaning of the statutory exemption of gifts from gross income by Section 22 (b) (3) . ”

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Source: Wikisource

Stanley Forman Reed, Helvering v. American Dental Company…

“ Income is not realized by a taxpayer by virtue of the discharge of his indebtedness as the result of an adjudication in bankruptcy, or by virtue of a composition agreement among his creditors, if immediately thereafter the taxpayer's liabilities exceed the value of his assets.'↑ The whole article was as follows:↑ Regulations 74, Art. ”

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Source: Wikisource

Stanley Forman Reed, Helvering v. American Dental Company…

“ Gifts, however, is a generic word of broad connotation, taking coloration from the context of the particular statute in which it may appear. Its plain meaning in its present setting denotes, it seems to us, the receipt of financial advantages gratuitously. ”

Stanley Forman Reed

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Quotes from Helvering v. American Dental Company… (Stanley Forman Reed)

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