California Federal Life Insurance Company v. Commissioner of Internal Revenue

California Federal Life Insurance Co. appeals from a decision of the Tax Court determining the income tax ramifications of the exchange of Swiss francs for U. S. Double Eagle gold coins. 76 T.C. 107 . On March 31, 1975, California Federal exchanged 110,079.9 Swiss francs for 175 United States Double Eagle $20 gold coins. The aggregate fair market value of the gold coins received was $43,426.52 (U.S.) , each coin being worth from $275 to $18,-000. .California Federal, however, accorded the gold coins only their face value of $3,500 and consequently claimed a substantial capital loss on the transaction. The Tax Court determined that under I.R.C. § 1001(b), the measure of the “amount realized” on the exchange of the Swiss francs was the fair market value of the gold coins, not their face value. 76 T.C. at 112 . It therefore held that there had been a gain on the transaction. The Tax Court also determined that the Swiss francs and gold coins were not of “like kind”, and therefore the gain on the exchange was not qualified for nonrecognition under I.R.C. § 1031. 76 T.C. at 115 . California Federal appeals both rulings. We affirm.

I.

I.R.C. § 1001(b) provides: “The amount realized…