Ellisberg v. Commissioner
United States Tax Court
In 1937 petitioner's son, who was at that time unemployed and without resources, went into the retail business. Petitioner furnished to him both credit and capital. Shortly thereafter the son borrowed additional capital from a bank and obtained petitioner's endorsement on notes given for such loans. Petitioner knew nothing of the condition of his son's business except that it was not good. He endorsed the notes only because he wanted to see his son stay in business.
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In 1937 petitioner's son, who was at that time unemployed and without resources, went into the retail business. Petitioner furnished to him both credit and capital. Shortly thereafter the son borrowed additional capital from a bank and obtained petitioner's endorsement on notes given for such loans. Petitioner knew nothing of the condition of his son's business except that it was not good. He endorsed the notes only because he wanted to see his son stay in business. In January 1939 the notes became due and the son was unable to pay them. Thereupon petitioner gave his own note to the bank in…
1Opinion of the Court
OPINION.
Kern, Judge:
The respondent disallowed the deduction of the bad debt involved here from petitioner’s 1941 gross income with the expía-nation attached to the notice of deficiency that the payments made by petitioner on his note in that year “do not represent allowable deductions from your income for the year 1941.”
The position of the respondent rests on the fact that the debt of the son to petitioner arising by reason of any payment by petitioner pursuant to his obligation as endorser became worthless prior to 1941. Indeed, all the evidence does establish the fact that it was worthless…
2Cases cited5 opinions
- Eckert v. BurnetSupreme Court of the United States · 1931
- Helvering v. PriceSupreme Court of the United States · 1940
- Leslie v. CommissionerUnited States Tax Court · 1946
- Stanley v. McElrathCalifornia Supreme Court · 1890
- Williams v. WalkerCalifornia Court of Appeal · 1924
3Cited by26 opinions
- Clark v. CommissionerUnited States Tax Court · 1952
- Mercil v. CommissionerUnited States Tax Court · 1955
- Casco Bank & Trust Co. v. United StatesCourt of Appeals for the First Circuit · 1976
- Estate of Van Anda v. CommissionerUnited States Tax Court · 1949
- Martin v. CommissionerUnited States Tax Court · 1962
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