Levy v. Commissioner
United States Board of Tax Appeals
Petitioner, the owner of all the outstanding stock of corporation, sold that stock at a loss in the taxable year. The corporation had become indebted to petitioner for advances made over a period of years and, in the taxable year, petitioner sold his claim against the corporation to the purchaser of the stock of the corporation for an amount less than the face value of the debt.
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Petitioner, the owner of all the outstanding stock of corporation, sold that stock at a loss in the taxable year. The corporation had become indebted to petitioner for advances made over a period of years and, in the taxable year, petitioner sold his claim against the corporation to the purchaser of the stock of the corporation for an amount less than the face value of the debt. At the end of the taxable year and after the stock and debt had been sold, petitioner charged off on his books the difference between the amount of the debt and the amount which he received on its sale. Held, that…
1Opinion of the Court
*425OPINION.
Abundell :
The only question before us is whether or not petitioner is entitled to a deduction for a partial bad debt with respect to the account receivable sold by petitioner in the taxable year or whether he is limited in his deduction by section 117 of the Revenue Act of 1936. Petitioner contends that he ascertained the account to be partially uncollectible and charged off that amount in the taxable year. Respondent argues that the sale of the account receivable gave rise to the loss and that the transaction was a sale or exchange of a capital asset within the purview of section 117.
2Cases cited1 opinion
- McClain v. CommissionerSupreme Court of the United States · 1941
3Cited by2 opinions
- Von Hoffman Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1958
- Levy v. CommissionerUnited States Board of Tax Appeals · 1942