Watson v. Commissioner
United States Tax Court
1. The taxpayer, reporting income on a cash basis, advanced operating funds to a corporation owned principally by him and received therefor the corporation's notes, which he discounted at a bank. The corporation became insolvent, and in 1934 was liquidated and dissolved without paying the notes.
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1. The taxpayer, reporting income on a cash basis, advanced operating funds to a corporation owned principally by him and received therefor the corporation's notes, which he discounted at a bank. The corporation became insolvent, and in 1934 was liquidated and dissolved without paying the notes. The taxpayer renewed the notes in the corporation's name, endorsing the renewals, until 1940, when he paid off the renewed notes by personal check and simultaneously borrowed the same amount from the payee bank on his individual note. In 1941 he paid his individual note by check and borrowed a lesser…
1Opinion of the Court
OPINION.
Johnson, Judge:
1. On his income tax return for 1940 petitioner claimed a bad debt deduction of $13,150 on account of final payment of the obligation under notes, originally aggregating $15,475, w;hich Green Road gave him in 1934 for cash advances and which the Colonial Trust Co. immediately discounted on his endorsement, paying him the proceeds. Because he simultaneously borrowed $13,150 from the trust company by a new note and he reports his income for tax purposes on the basis of cash receipts and disbursements, as a precautionary measure he claimed the same deduction for 1941, when…
2Cases cited5 opinions
- Weiss v. StearnSupreme Court of the United States · 1924
- Eckert v. BurnetSupreme Court of the United States · 1931
- Wilmington Trust Co. v. HelveringSupreme Court of the United States · 1942
- Burgess v. CommissionerUnited States Tax Court · 1947
- Helvering v. CampbellSupreme Court of the United States · 1941
3Cited by34 opinions
- Putnam v. CommissionerSupreme Court of the United States · 1956
- Crown v. CommissionerUnited States Tax Court · 1981
- Wilkerson v. CommissionerUnited States Tax Court · 1978
- Rubnitz v. CommissionerUnited States Tax Court · 1977
- Jergens v. CommissionerUnited States Tax Court · 1951
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