Jacob Abdalla and Mary T. Abdalla v. Commissioner of Internal Revenue

RANDALL, Circuit Judge:

This case presents the question whether the availability or amount of a deduction claimed by a taxpayer under I.R.C. § 1374 of the net operating loss of a Subchapter S corporation in which the taxpayer is a holder of capital stock and debt is affected by the fact that on a date (October 26, 1966) during both the taxpayer’s taxable year (ended December 31, 1966) and the corporation’s taxable year (ended January 31, 1967), the corporation was adjudicated bankrupt and the capital stock and debt in the corporation owned by the taxpayer became worthless. The taxpayer claimed…