Connection lost
Server error
Cottage Savings Assn. v. Commissioner Case Brief
Why Top Law Students (And Those Aspiring to Be) Use LSD+ Briefs
Let's be real, law school is a marathon. Our exclusive Flash-to-Full case system is designed by Harvard Law School and MIT grads to match your pace: Quick summaries when you're slammed, detailed analysis when you need to go deep. Only LSD+ offers this kind of flexibility to genuinely fit your study flow.
Adaptive Case Views
Toggle between Flash, Standard, and Expanded. Get what you need, when you need it.
Exam-Ready IRAC Format
We deliver the precise structure professors look for in exam answers.
Complex Cases, Clarified
We break down dense legal reasoning into something digestible, helping you grasp core concepts.
Case Brief Summary & Legal Analysis
tl;dr: A savings and loan exchanged a pool of devalued mortgages for a similar pool from another lender. The Court held this was a taxable event, allowing the S&L to realize and deduct its losses because the underlying loans, having different debtors and collateral, were ‘materially different’ legal entitlements.
Legal Significance: Established that for tax purposes, properties are ‘materially different’—triggering a realization event under I.R.C. § 1001(a)—if they confer legally distinct entitlements, regardless of whether they are economic substitutes. This provides a clear, formalistic test for realization.
Cottage Savings Assn. v. Commissioner Law School Study Guide
Use this case brief structure for your own legal analysis. Focus on the IRAC methodology to excel in law school exams and cold calls.
Case Facts & Court Holding
Key Facts & Case Background
Petitioner Cottage Savings Association (Cottage Savings), a savings and loan (S&L), held numerous long-term, low-interest mortgages that had significantly declined in fair market value. To realize tax-deductible losses without violating regulatory accounting rules that would threaten its solvency, Cottage Savings utilized a directive from the Federal Home Loan Bank Board (FHLBB), Memorandum R-49. This memorandum permitted S&Ls to exchange mortgages for ‘substantially identical’ mortgages held by other lenders without having to report the losses on their regulatory books. On December 31, 1980, Cottage Savings sold 90% participation interests in a pool of 252 mortgages and simultaneously purchased 90% participation interests in a pool of 305 mortgages from other S&Ls. The mortgage pools were matched according to the ten criteria in Memorandum R-49 to ensure they were ‘substantially identical’ in terms of economic characteristics. However, the exchanged participation interests were derived from loans made to different obligors and secured by different parcels of real property. Cottage Savings claimed a tax deduction of over $2.4 million, representing the difference between the face value of the interests it relinquished and their fair market value. The Commissioner of Internal Revenue disallowed the deduction, arguing no realization event had occurred.
Court Holding & Legal Precedent
Issue: Does an exchange of mortgage participation interests for another pool of interests that are ‘substantially identical’ for regulatory purposes but derive from different loans with different obligors and collateral constitute a ‘disposition of property’ under I.R.C. § 1001(a), thereby triggering the realization of a deductible loss?
Yes. The exchange of mortgage participation interests was a realization event under Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur
IRAC Legal Analysis
Complete IRAC Analysis for Higher Grades
IRAC (Issue, Rule, Analysis, Conclusion) is the exact format professors want to see in your exam answers. Our exclusive Flash-to-Full briefs combine holding, analysis, and rule statements formatted to match what A+ students produce in exams. These structured briefs help reinforce the essential legal reasoning patterns expected in law school.
Legal Issue
Does an exchange of mortgage participation interests for another pool of interests that are ‘substantially identical’ for regulatory purposes but derive from different loans with different obligors and collateral constitute a ‘disposition of property’ under I.R.C. § 1001(a), thereby triggering the realization of a deductible loss?
Conclusion
The decision establishes a clear, formalistic, and administrable test for realization under Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nis
Legal Rule
An exchange of property gives rise to a realization event under I.R.C. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in r
Legal Analysis
The Court first affirmed the validity of Treasury Regulation § 1.1001-1, which Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, c
Flash-to-Full Case Opinions
Flash Summary
- An exchange of property triggers a taxable gain or loss under