National City Bank v. Commissioner

Board of Tax Appeals

National City Bank v. Commissioner

11 B.T.A. 699, 1928 BTA LEXIS 3740

CourtUnited States Board of Tax Appeals

DecidedApril 19, 1928

DocketDocket No. 8928.

StatusPublished

Cited by1 cases

This text of 11 B.T.A. 699 (National City Bank 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

National City Bank v. Commissioner, 11 B.T.A. 699, 1928 BTA LEXIS 3740 (bta 1928).

Pincite

Opinion

OPINION.

Lansdon :

The petitioner claims the right to deduct from its gross income for the taxable period the amounts of $11,500 and $37,315.92, representing notes ascertained to be worthless as losses sustained in such period. It makes as alternative contentions in respect thereof: First, that the total of these amounts was a loss sustained, or, second, that the notes were ascertained to be worthless, and charged off in [700]*700the taxable period, in effect, by the closing of its books on May 81, 1919.

Petitioner’s counsel argues that as a bank is engaged in dealing in money and securities, a loss occurs whenever an uncollectible loan is made and not at _ the date when the note evidencing such loan is ascertained to be uncollectible. We do not agree with this contention. When a bank loans money on a note, a debt is created, and any loss sustained therefrom is of the date when such debt is ascertained to be worthless.

The evidence in support of the petitioner’s alternative contentions is not convincing. All the notes in question were included in the petitioner’s assets as of May 31, 1919. There is no.evidence as to when any of these notes were made or due or whether any part of them was known to be worthless at the elate of the merger. There is ample evidence that all such notes were later ascertained to be worthless; but that fact does not establish worthlessness at May 31, 1919. The law provides not only that worthlessness must be ascertained, but that .a charge-off must be made in the taxable year or period. The petitioner concedes that no charge-off as worthless was made on its books in the taxable period, but contends that the closing of its books on the transfer of its assets to tire Fidelity National Bank & Trust Co. and to trustees complies with this statutory provision. Even if this contention was admitted as proved, it is not material, since the record shows that the notes were not ascertained to be worthless at May 31, 1919.

Reviewed by the Board.

Judgment will be entered for the respondent.

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

OPINION.

Lansdon :

The petitioner claims the right to deduct from its gross income for the taxable period the amounts of $11,500 and $37,315.92, representing notes ascertained to be worthless as losses sustained in such period. It makes as alternative contentions in respect thereof: First, that the total of these amounts was a loss sustained, or, second, that the notes were ascertained to be worthless, and charged off in [700]*700the taxable period, in effect, by the closing of its books on May 81, 1919.

Petitioner’s counsel argues that as a bank is engaged in dealing in money and securities, a loss occurs whenever an uncollectible loan is made and not at _ the date when the note evidencing such loan is ascertained to be uncollectible. We do not agree with this contention. When a bank loans money on a note, a debt is created, and any loss sustained therefrom is of the date when such debt is ascertained to be worthless.

The evidence in support of the petitioner’s alternative contentions is not convincing. All the notes in question were included in the petitioner’s assets as of May 31, 1919. There is no.evidence as to when any of these notes were made or due or whether any part of them was known to be worthless at the elate of the merger. There is ample evidence that all such notes were later ascertained to be worthless; but that fact does not establish worthlessness at May 31, 1919. The law provides not only that worthlessness must be ascertained, but that .a charge-off must be made in the taxable year or period. The petitioner concedes that no charge-off as worthless was made on its books in the taxable period, but contends that the closing of its books on the transfer of its assets to tire Fidelity National Bank & Trust Co. and to trustees complies with this statutory provision. Even if this contention was admitted as proved, it is not material, since the record shows that the notes were not ascertained to be worthless at May 31, 1919.

Reviewed by the Board.

Judgment will be entered for the respondent.

Cite This Page — Counsel Stack

Bluebook (online)

11 B.T.A. 699, 1928 BTA LEXIS 3740, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-city-bank-v-commissioner-bta-1928.

Opinion

Related

Cite This Page — Counsel Stack