Harris v. Commissioner

Board of Tax Appeals

Harris v. Commissioner

19 B.T.A. 895, 1930 BTA LEXIS 2307

CourtUnited States Board of Tax Appeals

DecidedMay 9, 1930

DocketDocket No. 33872.

StatusPublished

Cited by1 cases

This text of 19 B.T.A. 895 (Harris 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

Harris v. Commissioner, 19 B.T.A. 895, 1930 BTA LEXIS 2307 (bta 1930).

Pincite

Opinion

[896]*896OPINION.

Smith:

Section 214(a) of the Revenue Act of 1924 provides that an individual in computing net income shall be allowed, among others, the following deductions:

(7) Debts ascertained to be worthless and charged off within the taxable year * * *; and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt to be charged off in part.

The deduction of the alleged bad debt in the amount of $5,300 has been disallowed by the respondent upon the ground that the petitioner, almost the only stockholder of the corporation, to save the [897]*897corporation from bankruptcy, canceled a portion of the corporation’s indebtedness to him and that the transaction was in the nature of a capital contribution by the petitioner.

We are of the opinion that the transaction by which the petitioner advanced money to the corporation was in good faith. The results of operations in 1924 proved to be disastrous. There can be no question as to the advancement of the moneys by the petitioner nor any question as to the fact that the corporation was not at the close of 1924 in a position to pay more than a small portion of its indebtedness. It had but few assets of value. Upon the record we are of the opinion that the $5,300 claimed as a deduction constituted a bad debt ascertained to be worthless and charged off within the year.

Judgment will l>e entered for the petitioner.

Free access — add to your briefcase to read the full text and ask questions with AI

[896]*896OPINION.

Smith:

Section 214(a) of the Revenue Act of 1924 provides that an individual in computing net income shall be allowed, among others, the following deductions:

(7) Debts ascertained to be worthless and charged off within the taxable year * * *; and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt to be charged off in part.

The deduction of the alleged bad debt in the amount of $5,300 has been disallowed by the respondent upon the ground that the petitioner, almost the only stockholder of the corporation, to save the [897]*897corporation from bankruptcy, canceled a portion of the corporation’s indebtedness to him and that the transaction was in the nature of a capital contribution by the petitioner.

We are of the opinion that the transaction by which the petitioner advanced money to the corporation was in good faith. The results of operations in 1924 proved to be disastrous. There can be no question as to the advancement of the moneys by the petitioner nor any question as to the fact that the corporation was not at the close of 1924 in a position to pay more than a small portion of its indebtedness. It had but few assets of value. Upon the record we are of the opinion that the $5,300 claimed as a deduction constituted a bad debt ascertained to be worthless and charged off within the year.

Judgment will l>e entered for the petitioner.

Cite This Page — Counsel Stack

Bluebook (online)

19 B.T.A. 895, 1930 BTA LEXIS 2307, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harris-v-commissioner-bta-1930.

Opinion

Related

Cite This Page — Counsel Stack