Case detail

Cottage Savings Association v. Commissioner

499 U.S. 554 (1991)

Court

Supreme Court

Date

1991-06-17

Outcome

for-taxpayer

Holding

A loss is realized when exchanged properties are materially different, even if they are economically similar in broad market terms.

Facts

A savings association exchanged mortgage participation interests with another lender and claimed a loss deduction on the swap.

Reasoning

The Court held that realization occurred because the legal entitlements embodied in the exchanged interests were materially different.

Case metadata

Jurisdiction: United States

Topics: realization, losses, property exchanges

Statutes applied: 26 U.S.C. 61

Official opinion

Open official decision

Primary sources

Official opinion PDFVerified 2026-05-01

Important disclaimer

This library is for general tax education only. Always verify filing obligations, due dates, and tax consequences against the cited primary source or with a qualified tax professional.