concurring: I concur in the result reached in this case and in Federal National Mortgage Association v. Commissioner, 90 T.C. 29 (filed this same date) [FNMA), that the taxpayers realized and may recognize losses on exchanges of interests in mortgage loan portfolios. I disagree with the result reached by the District Court in Centennial Savings Bank FSB v. United States, 682 F. Supp. 1389 (N.D. Tex. 1988). The reason for my conclusion, however, differs from the analysis set forth in any of those opinions.
In this case and in FNMA, the Court finds that the loan portfolios that were the subject of the exchange transactions did differ materially, either in kind or extent, from each other. In Centennial Savings Bank FSB, the District Court concluded that the loan portfolios exchanged did not differ materially in kind or extent. It is possible, of course, to argue that these are merely permissible different conclusions reached by the respective trial judges, each of whom made findings of fact in support of his conclusion. It seems to me, however, that the correct result in these cases does not depend on such factual determinations.
My approach focuses on interpretation of section 1.1001-1(a), Income Tax Regs. As indicated in the majority opinion, that regulation could have, but does not state that income or loss is only sustained upon “exchange of property for other property differing materially either in kind or in extent” (p. 390); prior regulations containing such a requirement have not been carried forward in the current regulation (note 13); and the converse of a true statement is not necessarily true (note 14). Respondent contends that the regulation means that the gain or loss realized from the exchange of property for other property not differing materially either in kind or extent is not treated as income or loss. I believe that the regulation deals with computation of gain or loss and not with whether gain or loss will be realized or recognized.
The regulation, of course, is subordinate to the statute. Section 1001(c) provides:
SEC. 1001(c). Recognition of Gain or Loss — Except as otherwise provided in this subtitle, the entire amount of gain or loss, determined under this section, on the sale or exchange of property shall be recognized, w
The only relevant nonrecognition provisions or exceptions “otherwise provided in this subtitle” are the statutory wash sale provisions set forth in section 1031, dealing with like-kind exchanges, or section 1091, dealing with wash sales of stock or securities. The parties in this case (although not in FNMA or Centennial) agree that neither of those sections is applicable. Section 1031 expressly excludes applicability of the “like-kind exchange” rules to evidence of indebtedness. I suggest that this is an appropriate situation for applying the maxim “Expressio unius est exclusio alterius.” See duPont v. Commissioner, 118 F.2d 544, 545 (3d Cir. 1941); 1 J. Mertens, Law of Federal Income Taxation, sec. 3.17.
As the majority points out, respondent is nonetheless asking that we adopt a nonstatutory wash sale provision. The majority correctly, in my view, rejects that position (pp. 397-399). I would hold that, as a matter of law, there is no requirement applicable in this case that the properties exchanged differ materially in kind or in extent.
Nims, Whitaker, Wright and Williams, JJ., agree with this concurring opinion.