Vaughan v. Commissioner
United States Board of Tax Appeals
Petitioner, a large stockholder in and president of several banks, made substantial payment to one of such banks to cover defalcation made by an employee and to prevent the closing of such bank. The amount so paid was in addition to petitioner's obligation for double liability upon his stock. No like payment was made by the other stockholder. Held that petitioner did not sustain any deductible loss by reason of such payment.
1Opinion of the Court
*621OPINION.
Phillips:
The question for decision is whether petitioner sustained a loss in 1923 which he may deduct in computing his net income subject to tax. A substantial part of the facts appear in the previous report of this proceeding (15 B. T. A. 596). There is no question that the First National Bank of Lexington sustained a loss which it may deduct. Such a loss is not available to the individual stockholders. It may cause the value of their stock to fluctuate, but until the stock is sold or becomes worthless, a stockholder of a corporation sustains no loss which is deductible for tax…
2Cited by13 opinions
- Smith v. CommissionerUnited States Tax Court · 1976
- Schleppy v. CommissionerCourt of Appeals for the Fifth Circuit · 1979
- Coosa Land Co. v. CommissionerUnited States Board of Tax Appeals · 1933
- Martin v. CommissionerUnited States Board of Tax Appeals · 1933
- Ronald E. Schleppy and Leonette R. Schleppy v. Commissioner of Internal Revenue, David N. Smith and Judith A. Smith v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1979
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