Ernest W. Brown, Inc. v. Commissioner
United States Tax Court
1. Deduction -- Loss -- Termination of Contracts and Business. -- The taxpayer has not shown its right to deduct in 1952 an alleged loss on contracts which, by their terms, could not survive the death in 1947 of the one man who was to perform the work under those contracts. 2. Id. -- Basis -- Transferee Takes Transferor's Zero Basis -- Secs. 112 (b) (5) and 113 (a) (8) and (b). -- The transaction in 1923 whereby the petitioner was named attorney in fact and manager and…
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1. Deduction -- Loss -- Termination of Contracts and Business. -- The taxpayer has not shown its right to deduct in 1952 an alleged loss on contracts which, by their terms, could not survive the death in 1947 of the one man who was to perform the work under those contracts. 2. Id. -- Basis -- Transferee Takes Transferor's Zero Basis -- Secs. 112 (b) (5) and 113 (a) (8) and (b). -- The transaction in 1923 whereby the petitioner was named attorney in fact and manager and thereby succeeded to a profitable business formerly conducted individually by its sole stockholder was within sections 112…
1Opinion of the Court
OPINION.
Murdock, Judge:
The petitioner argues that it paid $466,000 to obtain contracts by which it acted as attorney in fact and manager for two reciprocal insurance exchanges; it was not entitled to amortize the cost because the contracts had an indefinite life; the contracts were canceled by the exchanges in 1952; and a deductible loss of $466,000 was sustained at that time. The Commissioner, in his brief, defends the disallowance on the grounds that the issuance of the debentures was not a bona fide transaction at arm’s length, the debentures did not represent a genuine indebtedness, and…
2Cited by6 opinions
- Estate of Leavitt v. CommissionerUnited States Tax Court · 1988
- Borg v. CommissionerUnited States Tax Court · 1968
- Ernest W. Brown, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1958
- Borg v. CommissionerUnited States Tax Court · 1968
- Ernest W. Brown, Inc. v. CommissionerUnited States Tax Court · 1957
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