Robert C. Wheeler, Wesley L. Wheeler, Howard E. Wheeler and Eugene M. Wheeler v. Commissioner of Internal Revenue

This appeal raises two main issues: (1) Whether shareholders and shareholder-officers who advance money to the corporation, thereby creating bona fide debts, may obtain business bad debt deductions under § 23 (k), Internal Revenue Code of 19-39, when the corporation becomes unable to pay its debts; (2) whether a loss on the shareholders’ guaranties of the corporation’s debts to a third party is deductible as a loss under § 23(e) or only as a non-business bad debt under § 23 (k) (4), Internal Revenue Code of 1939, and whether the loss was incurred in 1946. The Tax Court found for the…