Smith v. Commissioner
United States Tax Court
It is the opinion of the Tax Court that to qualify for a deduction under sec. 166(a)(1), I.R.C. 1954, as a business bad debt, a taxpayer must prove that the primary and dominant motivation for creation of the debt was related to a trade or business conducted by taxpayer.
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It is the opinion of the Tax Court that to qualify for a deduction under sec. 166(a)(1), I.R.C. 1954, as a business bad debt, a taxpayer must prove that the primary and dominant motivation for creation of the debt was related to a trade or business conducted by taxpayer. Held: In this case the Tax Court will apply the "significant motivation" test approved by the Court of Appeals for the Fifth Circuit in United States v. Generes, 427 F. 2d 279 (C.A. 5, 1970), that being the circuit within which this case arose. See Jack E. Golsen, 54 T.C. 742. Taxpayer having shown that the advances to his…
1Opinion of the Court
DiieNNEN, Judge:
Respondent determined deficiencies in petitioners’ income tax for the years 1965 and 1966 in the amounts of $43,420.24 and $30,026.03, respectively.
Because of concessions by the parties the only issue presented for our decision is whether certain advances made by petitioner to Smith Petroleum Service, Inc., are deductible as business bad debts, as non-business bad debts, or as ordinary and necessary business expenses. The amounts involved are $78,981.35 for the year 1965 and $6,844.32 for the year 1966.
FINDINGS OF FACT
Some of the facts were stipulated and they are so found.
Peti…
2Cases cited13 opinions
- Whipple v. CommissionerSupreme Court of the United States · 1963
- Millsap v. CommissionerUnited States Tax Court · 1966
- John M. Trent and Lisa M. Trent v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1961
- George P. Weddle and Bertha R. (Terris) Weddle v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1963
- Patchen v. CommissionerUnited States Tax Court · 1956
8 more not listed; retrieve them via the Exa API.
3Cited by41 opinions
- United States v. GeneresSupreme Court of the United States · 1972
- Putoma Corp. v. CommissionerUnited States Tax Court · 1976
- Smith v. CommissionerUnited States Tax Court · 1973
- Horne v. CommissionerUnited States Tax Court · 1972
- Levin v. United StatesUnited States Court of Claims · 1979
36 more not listed; retrieve them via the Exa API.