Opinion of the Court.

291 U.S.

migrants without an immigration visa, but only in case they obtained a permit to reënter under the provisions of § 10 of the Act of 1924. Id., 8 U.S.C. 210. In authorizing such permits the evident purpose of § 10 was to enable aliens who were domiciled here and contemplated a temporary absence, to equip themselves with evidence which would identify them and facilitate their reëntry. They could thus avoid the trouble and delay incident to the procuring of an immigration visa from a consulate abroad. The permit is prima facie evidence of the fact that the alien is returning from a temporary visit. The regulations prescribed under § 10 and § 13 (b) except

"Section 10 provides:

Sec. 10. (a) Any alien about to depart temporarily from the United States may make application to the Commissioner General for a permit to reënter the United States, stating the length of his intended absence, and the reasons therefor. Such application shall be made under oath, and shall be in such form and contain such information as may be by regulations prescribed, and shall be accompanied by two copies of the applicant's photograph.

"(b) If the Commissioner General finds that the alien has been legally admitted to the United States, and that the application is made in good faith, he shall, with the approval of the Secretary of Labor, issue the permit, specifying therein the length of time, not exceeding one year, during which it shall be valid. The permit shall be in such form as shall be by regulations prescribed and shall have permanently attached thereto the photograph of the alien to whom issued, together with such other matter as may be deemed necessary for the complete identification of the alien.

"(c) On good cause shown the validity of the permit may be extended for such period or periods, not exceeding six months each, and under such conditions, as shall be by regulations prescribed.

"(f) A permit issued under this section shall have no effect under the immigration laws, except to show that the alien to whom it is issued is returning from a temporary visit abroad; but nothing in this section shall be construed as making such permit the exclusive means of establishing that the alien is so returning."

*See House Report No. 350, 68th Cong., 1st Sess., p. 18.

420

Opinion of the Court.

aliens who have such permits from the requirement that an immigration visa must be obtained. See Immigration Rules of March 1, 1927; Rule 3, Subdiv. F, Pars. 1, 3; Subdiv. I, Par. 2. Valid permits may be presented "in lieu of immigration visas." Executive Order No. 4813 of February 21, 1928.

These provisions should be read in connection with § 16. And as they make the possession of a permit to reënter the equivalent of an unexpired visa, the permit should be taken to stand in place of the visa required by § 16. In this view, where the returning alien has the prescribed permit, no fine can be imposed. This conclusion, however, gives no aid to plaintiff as the alien in the instant case had neither visa nor permit. We are unable to agree with the contention that where a permit will suffice, § 16 must be regarded as having no application. As we have said, we think the proper construction of § 16, taken with § 13, is that the permit is merely a substitute for the visa and satisfies the requirement.

Plaintiff's argument that under § 13 a discretion is vested in the Secretary of Labor to admit the returning alien, and that the exercise of that discretion in his favor tolls the fine, is met by the provision of sub-division (f) of § 13: "Nothing in this section shall authorize the remission or refunding of a fine, liability to which has accrued under § 16." Plaintiff urges that if the alien is admitted, no liability for the fine can be said to have "accrued." But § 16 does not make the liability turn upon the admissibility or admission of the alien. Whatever may have been the effect of prior statutory provisions, § 16 of the Act of 1924 makes it clear that the occasion for the fine is the bringing in of the alien without an unexpired visa or that which is prescribed as an equivalent. The question whether the Secretary of Labor had authority to admit the alien in this instance need not be considered, for if it were assumed that the Secretary under

§ 13 could admit the alien in his discretion, the fine would still stand. We agree with the Circuit Court of Appeals in the view that § 13 (f) "preserves the fine against any discretionary admission."

Equally unavailing is the plea that the fine, as prescribed, is indivisible, and hence that no fine whatever can be imposed where the alien is admitted and the transportation company, for that reason, has not been required to return the passage money. It is true that the requirement of the payment of the passage money is for the benefit of the alien and the reason for that part of the penalty disappears on the alien's admission. But although admission in certain cases is contemplated by § 13, liability to fine under § 16 is none the less maintained. We think it follows that, in a case of admission, the fine of $1000 can legally be imposed without requiring payment of the passage money and the fact that the latter has not been required gives plaintiff no ground for complaint.

Plaintiff was charged with knowledge of the statute and brought in the alien in violation of its provisions. Compare Elting v. North German Lloyd, 287 U.S. 324, 328, 329. The judgment is

Affirmed.

HELVERING, COMMISSIONER OF INTERNAL REVENUE, v. AMERICAN CHICLE CO.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.

No. 349. Argued February 6, 1934.-Decided March 5, 1934.

Under the Revenue Acts of 1921, 1924 and 1926, a corporation which acquired all of the assets and assumed all of the liabilities of another, and thereafter purchased in the open market some of the latter's bonds at less than their face value, held to have realized

426

Argument for Petitioner.

a taxable gain in the difference between the face value of the bonds and the amount it paid for them. United States v. Kirby Lumber, Co., 284 U.S. 1. P. 430.

65 F. (2d) 454, reversed.

CERTIORARI, 290 U.S. 616, to review a judgment affirming a decision of the Board of Tax Appeals, 23 B.T.A. 221.

Mr. Erwin N. Griswold, with whom Solicitor General Biggs and Messrs. Sewall Key and Norman D. Keller were on the brief, for petitioner.

Income may arise from the reduction of a liability as well as from an increase in value of the property subsequently realized by a sale or other disposition. Since the income tax laws are based upon the results of annual transactions, there is no need to await the sale of the property before taxing the gain realized upon the extinguishment of an obligation incurred in acquiring the property. Here there were separate and independent transactions. In the first, the assets were acquired and their cost was definitely fixed when the respondent assumed the obligation of the bonds. The bonds were retired in subsequent years in a separate series of transactions between the respondent and persons other than the corporation from which the property was acquired. Such separate transactions gave rise to taxable income in the years when they occurred. Since income may be derived by the receipt of property as well as cash, the difference in facts between this case and the Kirby Lumber case, 284 U.S. 1, should not lead to a different result. Commissioner v. Coastwise Transp. Corp., 62 F. (2d) 332, supports petitioner's position. Bowers v. Kerbaugh-Empire Co., 271 U.S. 170, was based on the fact that the whole of the property acquired had been lost, and that the subsequent favorable retirement was merely a diminution of the loss,-a situation which does not exist here.

Opinion of the Court.

291 U.S.

Mr. William C. Breed, with whom Mr. Paul L. Peyton was on the brief, for respondent.

This case is simply a purchase of property coupled with a payment on the purchase price during the taxable years pursuant to the obligation assumed by respondent. There has been no completed transaction, no realization of any loss or gain to respondent, because respondent still owns the property on which it has settled a bond liability at less than the face amount, resulting in a lower cost of the entire property. No sale, exchange or parting with title has taken place, and there are no means of knowing whether respondent will realize a profit or a loss on the transaction until and unless it sells or disposes of the property in question.

In order to lay any basis for ascertaining a taxable gain or loss under petitioner's theory, it would seem there would have to be an appraisal of the property to determine whether the total cost was more or less than such appraised value. However, an attempt to determine a gain or loss on this theory, where no sale or parting with title has taken place and nothing has been realized upon the transaction, would be contrary to the notion underlying our system of taxation. Distinguishing United States v. Kirby Lumber Co. 284 U.S. 1.

MR. JUSTICE MCREYNOLDS delivered the opinion of the Court.

Assessments by petitioner which treated as realized income the difference between the face value of certain bonds assumed by respondent in 1914 and the amount at which it purchased them in 1922, 1924 and 1925, were disapproved by the Board of Tax Appeals. The court below affirmed this action, and the matter is here by certiorari. The meager stipulated facts present only a narrow point; and to that our decision must be limited.