Dowd v. Commissioner
United States Tax Court
In 1969 petitioner, a bankrupt not discharged, paid directly to creditors of the bankruptcy estate 15 percent of their claims from funds not part of the bankruptcy estate. Most of the creditors' claims were for costs of goods sold incurred by petitioner in a business which collapsed in 1963, precipitating the bankruptcy.
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In 1969 petitioner, a bankrupt not discharged, paid directly to creditors of the bankruptcy estate 15 percent of their claims from funds not part of the bankruptcy estate. Most of the creditors' claims were for costs of goods sold incurred by petitioner in a business which collapsed in 1963, precipitating the bankruptcy. In addition, petitioner paid court costs and attorneys' fees in 1969 relating solely to the procedure used by him to pay the creditors outside the bankruptcy estate. Held, payments to creditors in 1969 for identifiable costs of goods sold, the liability for which was incurred…
1Opinion of the Court
Goffe, Judge:
The Commissioner determined a deficiency in petitioners’ Federal income tax for the taxable year 1969 in the amount of $48,625.97. The issue remaining for decision is whether petitioners may deduct $69,908.67 paid to trade creditors and $7,532.27, the expense of litigation relating thereto, as either ordinary and necessary business expenses or expenses incurred for the production of income.
FINDINGS OF FACT
Some of the facts have been stipulated. The stipulation of facts, supplemental stipulation of facts, and the attached exhibits are incorporated by this reference.
Petitioners…
2Cases cited17 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Gregory v. HelveringSupreme Court of the United States · 1935
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- United States v. GilmoreSupreme Court of the United States · 1963
- Kornhauser v. United StatesSupreme Court of the United States · 1928
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3Cited by15 opinions
- Ostrom v. CommissionerUnited States Tax Court · 1981
- United States v. BaileyDistrict Court, N.D. Texas · 1992
- In Re Ralph J. Collins, Debtor. United States of America v. Ralph J. CollinsCourt of Appeals for the Eleventh Circuit · 1994
- Tolzman v. CommissionerUnited States Tax Court · 1981
- Lawler v. CommissionerUnited States Tax Court · 1995
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