The taxpayer, who was a businessman engaged in the business of manufacturing soap, purchased in each year first residential mortgages with an above-average degree of risk at a discount of 15%. Judson J. held (p. 1205) that the trial judge had erred:
"in failing to find on the evidence ... that the respondent had engaged in a highly speculative business of purchasing mortgages at a discount and holding them to maturity in order to realize the maximum amount of profit out of the transaction, and in failing to find that the discounts realized were taxable income so there are profits or gains from a trade or business ..."