West Lafayette Bank v. Commissioner
United States Board of Tax Appeals
The fact that a bank writes down or charges off against bonds owned by it reductions in the market value thereof upon the orders of the State Banking Department is not sufficient to establish that such amounts so charged off are debts ascertained to be worthless, in whole or in part, within the taxable year.
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The fact that a bank writes down or charges off against bonds owned by it reductions in the market value thereof upon the orders of the State Banking Department is not sufficient to establish that such amounts so charged off are debts ascertained to be worthless, in whole or in part, within the taxable year. Bonds generally represent an investment in property from which gain is realized or loss sustained upon the sale or other disposition and are not such debts as are contemplated by the provisions of the Revenue laws permitting deductions for bad debts.
1Opinion of the Court
*1357OPINION.
Van Fossan :
The petitioner contends that the sum of the amounts charged off against the bonds held by it in the taxable year upon the order of the State Banking Department is an allowable deduction from gross income under section 234(a) (5) of the 1924 Revenue Act. The section of the Act relied upon provides that debts ascertained to be worthless and charged off in the taxable year shall be allowed as deductions in computing net income, and when it appears that a debt is recoverable only in part, such debt may be charged off in part.
While the cited provision of the 1924 Act allows the…
2Cases cited1 opinion
- Eisner v. MacOmberSupreme Court of the United States · 1920
3Cited by5 opinions
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- South Hills Trust Co. v. CommissionerUnited States Board of Tax Appeals · 1930
- West Lafayette Bank v. CommissionerUnited States Board of Tax Appeals · 1928