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HELVERING V. HAMMEL, 311 U. S. 504 (1941)

U.S. Supreme Court

Helvering v. Hammel, 311 U.S. 504 (1941)

Helvering v. Hammel

No. 49

Argued December 11, 1940

Decided January 6, 1941

311 U.S. 504


1. A loss sustained by an individual taxpayer upon the foreclosure sale of an interest in real estate which he had acquired for profit held, in computing taxable income under the Revenue Act of 1934, deductible only to the limited extent allowed by §§ 23(j) and 117(d) for losses from "sales" or exchanges of capital assets, and not in full under § 23(e)(2). Pp. 311 U. S. 505, 311 U. S. 510.

2. The language, the purpose, and the legislative history of the provisions of the Revenue Act of 1934 relating to capital gains and losses support the view that no distinction was intended between losses from forced sales and losses from voluntary sales of capital assets. P. 311 U. S. 510.

3. Courts are not free to reject the literal or usual meaning of the words of a statute when adoption of that meaning will not lead to absurd results nor thwart the obvious purpose of the statute. P. 311 U. S. 510.

4. In this case, the foreclosure sale, and not the decree of foreclosure, was the definitive event which established the loss within the meaning and for the purpose of the Revenue Act. P. 311 U. S. 512.

5. The view that the loss in this case may not be treated as a loss from a sale because, by the state law, the vendor in a land contract may declare a forfeiture upon default cannot be sustained, since it does not appear from the record that the contract in this case contained a forfeiture clause, nor that there was in fact a forfeiture apart from the foreclosure sale. P. 311 U. S. 512.

108 F.2d 753 reversed.

Certiorari, 310 U.S. 619, to review the affirmance of a decision of the Board of Tax Appeals redetermining a deficiency in income tax.

Page 311 U. S. 505

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