Mitchell Kelly v. George Patterson, Director of Internal Revenue

GRIFFIN B. BELL, Circuit Judge.

This appeal is from a judgment denying claims for refund of income taxes. The claims were premised on the deducti-bility of worthless loans and consequent loss carryback to the years 1956 through 1959. The sole question presented is whether loans by a taxpayer 1 to a corporation under the stated facts gave rise to business bad debts within the meaning of 26 U.S.C.A. § 166. 2

The stipulated facts disclose that Mr. Kelly operated the Gadsden Mill Works as a sole proprietorship for several years prior to 1958. He incorporated the K. Y. K. Company, Inc. in 1955 but…