Madden v. Commissioner

Board of Tax Appeals

Madden v. Commissioner

2 B.T.A. 702, 1925 BTA LEXIS 2283

CourtUnited States Board of Tax Appeals

DecidedSeptember 30, 1925

DocketDocket No. 2229.

StatusPublished

This text of 2 B.T.A. 702 (Madden 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.

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Madden v. Commissioner, 2 B.T.A. 702, 1925 BTA LEXIS 2283 (bta 1925).

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Opinion

[704]*704OPINION.

Smith:

The taxpayer alleges error on the part of the Commissioner in the. determination of a deficiency in income tax for the year 1919, in that he disallowed the deduction from gross income of a claimed loss upon the sale of the taxpayer’s residence of $9,976.14, and in that he erroneously computed the taxpayer’s income-tax liability after the disallowance of such deduction.

The facts relative to the transaction resulting in the claimed loss, upon the sale of the taxpayer’s residence in 1919, of $9,976.14 are fully set forth in the findings. The taxpayer claims that he is entitled to deduct the amount of the claimed loss under the provisions of section 214(a) (5) of the Revenue Act of 1918, which section permits the deduction from gross income in an individual tax return of “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; * * The Commissioner has disallowed the deduction on the ground that the alleged loss was not incurred in any transaction entered into for profit.

We think that the position of the Commissioner is correct. The evidence shows that the taxpayer purchased the lot in 1893 and built a residence thereon with the expectation that he and his wife should occupy it as a residence. They did occupy it as such from 1893 to the date of sale in 1919. The taxpayer tried to sell the property in 1913 or 1914 and was advised by real estate men that before it could be sold to advantage improvements would have to be made upon it. Upon such advice he made improvements to the property costing him in excess of $12,000. But he continued to occupy the house as a residence for several years after the improvements were made. The house was built originally to meet the taxpayer’s requirements for a home, and it was remodeled in 1915 and 1916. We do not think that the evidence shows that the transaction was one entered into for profit.

In his petition the taxpayer alleges error on the part of the Commissioner in determining his tax liability for the year 1919 upon an alleged net income of $102,549.42. He alleges that the amount of tax, if computed correctly, would be $5,687.24 instead of $6,002.24. Proof as to the alleged error was not presented at the hearing.

Ahóndele not participating.

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[704]*704OPINION.

Smith:

The taxpayer alleges error on the part of the Commissioner in the. determination of a deficiency in income tax for the year 1919, in that he disallowed the deduction from gross income of a claimed loss upon the sale of the taxpayer’s residence of $9,976.14, and in that he erroneously computed the taxpayer’s income-tax liability after the disallowance of such deduction.

The facts relative to the transaction resulting in the claimed loss, upon the sale of the taxpayer’s residence in 1919, of $9,976.14 are fully set forth in the findings. The taxpayer claims that he is entitled to deduct the amount of the claimed loss under the provisions of section 214(a) (5) of the Revenue Act of 1918, which section permits the deduction from gross income in an individual tax return of “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; * * The Commissioner has disallowed the deduction on the ground that the alleged loss was not incurred in any transaction entered into for profit.

We think that the position of the Commissioner is correct. The evidence shows that the taxpayer purchased the lot in 1893 and built a residence thereon with the expectation that he and his wife should occupy it as a residence. They did occupy it as such from 1893 to the date of sale in 1919. The taxpayer tried to sell the property in 1913 or 1914 and was advised by real estate men that before it could be sold to advantage improvements would have to be made upon it. Upon such advice he made improvements to the property costing him in excess of $12,000. But he continued to occupy the house as a residence for several years after the improvements were made. The house was built originally to meet the taxpayer’s requirements for a home, and it was remodeled in 1915 and 1916. We do not think that the evidence shows that the transaction was one entered into for profit.

In his petition the taxpayer alleges error on the part of the Commissioner in determining his tax liability for the year 1919 upon an alleged net income of $102,549.42. He alleges that the amount of tax, if computed correctly, would be $5,687.24 instead of $6,002.24. Proof as to the alleged error was not presented at the hearing.

Ahóndele not participating.

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2 B.T.A. 702, 1925 BTA LEXIS 2283, Counsel Stack Legal Research, https://law.counselstack.com/opinion/madden-v-commissioner-bta-1925.

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