Letz v. Commissioner

Petitioner's decedent was president of the X corporation from 1930 until his death in February 1936. X made a practice of paying part of its officers' salaries in cash and giving them negotiable demand notes for the balance, taking as deductions from its income the entire amount of such salaries. This practice coincided with the wishes of its officers, who considered these notes the best investments they could make. X was solvent and the notes were worth their face amount. Decedent received notes of X during the years 1930 to 1935, inclusive. He reported two of these notes as income, but did…