Steadman v. Comm'r

Petitioner, an attorney, purchased 32,000 additional shares of stock in a corporation to protect his position as its secretary and general counsel. The corporation's organizational concept called for extensive acquisitions and mergers involving considerable legal planning. The corporation suffered a large loss in 1962 causing a deficit in the shareholders' equity and was adjudicated bankrupt in 1964. Held, the corporation's stock became worthless in 1962. Held further, petitioner is entitled to deduct the loss occasioned by the worthlessness of the 32,000 shares as an ordinary loss under sec.…