Connolly v. State Tax Commission

Edward H. Howell, Judge.

The issue in this case is whether the plaintiff is entitled to deduct the amount of a judgment as a bad debt under OES 316.330 which allows any debt which becomes worthless during the tax year to be deducted in computing the taxpayer’s net income. The bad debt was originally deducted in plaintiff’s tax return for 1960 and later deductions were also taken on the debt for the years 1961, 1962 and 1963 pursuant to the loss carry-over provisions of ORS 316.353.

The defendant commission decided that the judgment arose out of a theft or embezzlement and consequently could not…