Roth Steel Tube Company v. Commissioner of Internal Revenue

ENGEL, Circuit Judge.

Petitioner Roth Steel Tube Company (Roth) appeals from the Tax Court’s ruling disallowing a deduction of $172,443 as an addition to Roth’s reserve for bad debts for the tax year ended April 30, 1972. 1 We affirm.

I

In its tax year ended April 30, 1972, Roth charged $172,443 against its reserve for bad debts in connection with the partial write-off of an account receivable. At the time that Roth attempted to charge off the $172,443 debt, its debtor was also its wholly owned subsidiary, operating under the name Roth American (American). American was acquired by Roth effective…