1940),[1] the United States Court of Appeals for the Second Circuit provided a broad definition of the term "sale or exchange."

The Kenan court reviewed the Commissioner's finding of a $367,687.12 deficiency in the income taxes of the trustees.

The trustees or taxpayers contended "that the delivery of the securities of the trust estate to the legatee was a donative disposition of property .

The court pointed out that "the trustees had the power to determine whether the claim should be satisfied [in cash or securities]."

The court then held that the trustees or taxpayers had realized a gain when they used the securities to satisfy the claim on the estate.