Darling v. Commissioner

Board of Tax Appeals

Darling v. Commissioner

19 B.T.A. 337, 1930 BTA LEXIS 2418

CourtUnited States Board of Tax Appeals

DecidedMarch 20, 1930

DocketDocket No. 34387.

StatusPublished

Cited by15 cases

This text of 19 B.T.A. 337 (Darling v. Commissioner) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Darling v. Commissioner, 19 B.T.A. 337, 1930 BTA LEXIS 2418 (bta 1930).

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Opinion

[338]*338OPINION.

Love :

That petitioner suffered a loss in the full amount of $40,000 may be conceded, as there is ample evidence to substantiate that fact.

[339]*339The pertinent statute involved here is section 214 (a) (5) of the Revenue Act of 1924 (this deal not being connected with the trade or business of petitioner) which section provides as follows:

Sec. 214. (a) In computing net income there shall be allowed as deductions:

⅝ ⅜: ⅝ ⅜ ⅜ sfc ⅜

(5) Losses sustained during the taxable year and not compensated for by insurance or otherwise, if incurred in any transaction entered into for profit, though not connected with the trade or business; * * *

That the loss here claimed was incurred and completely consummated not later than 1918, seems clear and uncontrovertible from the evidence in the case. Petitioner’s investment was in the stock of the corporation. The corporation, for a period of 12 years prior to 1918, had operated at a loss every year. No dividends had been paid; no profits had been realized. The business had declined to such an extent that all the stockholders had abandoned hope, and a strenuous effort was made to sell the wreckage at some salvage price. That effort was futile. The corporation was in debt to an extent of at least $4,300, evidently an amount in excess of the salvage value of all assets of the corporation. The stock had absolutely no value and was so regarded by all parties concerned. The statute prescribes that losses sustained during the taxable year shall be allowed. The taxable year in this case is 1924. The loss certainly did not occur in 1924. The lack of value in that stock in 1918 was then a demonstrable, if not a demonstrated, fact.

Petitioner urges the defense that he wanted to take the deduction in 1918, but was deterred from doing so by the advice of the revenue agent, who stated that he was not then entitled to the deduction. Being guided by unwise advice, from whatever source, can not mitigate the effect and force of the mandate of the statute.

Judgment will be entered for the respondent.

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[338]*338OPINION.

Love :

That petitioner suffered a loss in the full amount of $40,000 may be conceded, as there is ample evidence to substantiate that fact.

[339]*339The pertinent statute involved here is section 214 (a) (5) of the Revenue Act of 1924 (this deal not being connected with the trade or business of petitioner) which section provides as follows:

Sec. 214. (a) In computing net income there shall be allowed as deductions:

⅝ ⅜: ⅝ ⅜ ⅜ sfc ⅜

(5) Losses sustained during the taxable year and not compensated for by insurance or otherwise, if incurred in any transaction entered into for profit, though not connected with the trade or business; * * *

That the loss here claimed was incurred and completely consummated not later than 1918, seems clear and uncontrovertible from the evidence in the case. Petitioner’s investment was in the stock of the corporation. The corporation, for a period of 12 years prior to 1918, had operated at a loss every year. No dividends had been paid; no profits had been realized. The business had declined to such an extent that all the stockholders had abandoned hope, and a strenuous effort was made to sell the wreckage at some salvage price. That effort was futile. The corporation was in debt to an extent of at least $4,300, evidently an amount in excess of the salvage value of all assets of the corporation. The stock had absolutely no value and was so regarded by all parties concerned. The statute prescribes that losses sustained during the taxable year shall be allowed. The taxable year in this case is 1924. The loss certainly did not occur in 1924. The lack of value in that stock in 1918 was then a demonstrable, if not a demonstrated, fact.

Petitioner urges the defense that he wanted to take the deduction in 1918, but was deterred from doing so by the advice of the revenue agent, who stated that he was not then entitled to the deduction. Being guided by unwise advice, from whatever source, can not mitigate the effect and force of the mandate of the statute.

Judgment will be entered for the respondent.

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19 B.T.A. 337, 1930 BTA LEXIS 2418, Counsel Stack Legal Research, https://law.counselstack.com/opinion/darling-v-commissioner-bta-1930.

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