Benak v. Commissioner
United States Tax Court
In 1972, P bought stock in X which was designed to qualify as sec. 1244, I.R.C. 1954, stock. Later that year, X redeemed and canceled P's shares, issuing P a 1-year, 8-percent promissory note. In 1973, X borrowed funds on which P and others guaranteed payment. In 1974, X became delinquent in its payments on the loan, and in 1975, P made a payment in satisfaction of his obligation under the guaranty.
Read the full summary
In 1972, P bought stock in X which was designed to qualify as sec. 1244, I.R.C. 1954, stock. Later that year, X redeemed and canceled P's shares, issuing P a 1-year, 8-percent promissory note. In 1973, X borrowed funds on which P and others guaranteed payment. In 1974, X became delinquent in its payments on the loan, and in 1975, P made a payment in satisfaction of his obligation under the guaranty. Held, P's payment pursuant to the guaranty gives rise to a nonbusiness bad debt, deductible as a short-term capital loss in the year of payment. Held, further: The note received by P from X does…
1Opinion of the Court
Simpson, Judge-.
The Commissioner determined a deficiency of $25,509.03 in the petitioners’ Federal income tax for 1974. After a concession by the petitioners, the issues for decision are: (1) Whether the petitioners may deduct, as a business bad debt, an amount paid in satisfaction of their obligation as guarantors of a loan; and (2) whether the petitioners may deduct the amount of their investment in a corporation as a loss on section 1244 stock.
FINDINGS OF FACT
Some of the facts have been stipulated, and those facts are so found.
The petitioners, Henry J. and Margaret Benak, husband and wife,…
2Cases cited23 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Higgins v. CommissionerSupreme Court of the United States · 1941
- United States v. S. S. White Dental Manufacturing Co.Supreme Court of the United States · 1927
- Whipple v. CommissionerSupreme Court of the United States · 1963
18 more not listed; retrieve them via the Exa API.
3Cited by25 opinions
- Eisenberg v. CommissionerUnited States Tax Court · 1982
- Intergraph Corp. v. CommissionerUnited States Tax Court · 1996
- Lynch v. CommissionerUnited States Tax Court · 1983
- Taylor v. CommissionerUnited States Tax Court · 1989
- BAGGAO v. COMMISSIONERUnited States Tax Court · 1992
20 more not listed; retrieve them via the Exa API.