The issue is confined to the narrow determination of whether or not the conveyance to the mortgagee involved a "sale or exchange" of a capital asset.
The plaintiff relied among others on the case of Commissioner v. Freihofer, 3 Cir., 102 F.2d 787, 125 A.L.R. 761, in which the word "sale" as used in the provisions of the revenue statute limiting the deduction of losses from sales or exchanges of capital assets to $2,000 in excess of gains from such transactions included only sales voluntarily made by taxpayers and did not include foreclosure sales for amounts less than amounts of the mortgages.
He argued that the transfer in question to the mortgagee was on a parity with such a foreclosure sale and that he was entitled to the same tax treatment.
The position taken by the court in the case of Commissioner v. Freihofer, supra was followed in the case of Helvering v. Hammel, 6 Cir., 108 F.2d 753. However, in the case of Commissioner v. Electro-Chemical Engraving Co., 2 Cir., 110 F.2d 614, the court differed from the latter decisions and arrived at an opposite result.
To resolve this difference the Supreme Court granted certiorari in the cases of Commissioner v. Hammel and Commissioner v. Electro-Chemical Engraving Co., supra, and rendered its decisions in them on January 6, 1941. Helvering v. Hammel, 311 U.S. 504, 61 S. Ct. 368, 85 L. Ed. 303, 131 A.L.R. 1481, Electro-Chemical Engraving Co. v. Commissioner, 311 U.S. 513, 61 S. Ct. 372, 85 L. Ed. 308.
In these cases the Supreme Court reversed the conclusions found in the cases of Commissioner v. Hammel and Commissioner v. Freihofer, and upheld that in the case of Commissioner v. Electro-Chemical Engraving Co. The Court stated: "We can find no basis in the language of the Act, its purpose or its legislative history, for saying that losses from sales of capital assets under the 1934 Act, more than its predecessors, were to be treated any differently whether they resulted from forced sales or voluntary sales." Helvering v. Hammel, 311 U.S. 504, 511, 61 S. Ct. 368, 371, 85 L. Ed. , 131 A.L.R. 1481.
It is our opinion that this decision determines with finality the contentions of the plaintiff and judgment accordingly will be entered in favor of the defendant.
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