Spring v. Commissioner
United States Tax Court
In 1930 petitioner purchased stock warrants expiring January 2, 1940. All market value and intrinsic worth had disappeared from the options prior to 1940. Held, the loss is not deductible in 1940 as a loss on securities becoming worthless, within section 23 (g) (2) of the Internal Revenue Code, for the options had no value at the beginning of that year; held, further, the loss is not deductible under section 117 (g) ( 2) of the Internal Revenue Code, as a loss "attributable…
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In 1930 petitioner purchased stock warrants expiring January 2, 1940. All market value and intrinsic worth had disappeared from the options prior to 1940. Held, the loss is not deductible in 1940 as a loss on securities becoming worthless, within section 23 (g) (2) of the Internal Revenue Code, for the options had no value at the beginning of that year; held, further, the loss is not deductible under section 117 (g) ( 2) of the Internal Revenue Code, as a loss "attributable to the failure to exercise an option," for such losses are by the provisions of that section arbitrarily short term…
1Opinion of the Court
OPINION.
Abundell, Judge:
The question presented is whether petitioner’s loss is attributable to the failure to exercise his options within the meaning of section 117 (g) (2) of the Internal Revenue Code,1 as respondent contends, or is a loss resulting from securities becoming worthless within the meaning of section 23 (g) (2) of the Internal Revenue Code,2 as petitioner contends. Section 117 (g) (2) provides that' losses attributable to the failure to exercise options shall be considered short term capital losses which, for the year 1940, were deductible only to the extent of short term…
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