Nordblom Associates, Inc. v. Commissioner
United States Tax Court
Petitioner paid $ 25,000 for an option to purchase certain corporate stock with the expectation that another corporation, not obligated so to do, would take over and exercise the option and not only reimburse petitioner for the purchase price of the option but also pay it a commission on purchase of the optioned stock. The option was not so taken over and was not exercised.
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Petitioner paid $ 25,000 for an option to purchase certain corporate stock with the expectation that another corporation, not obligated so to do, would take over and exercise the option and not only reimburse petitioner for the purchase price of the option but also pay it a commission on purchase of the optioned stock. The option was not so taken over and was not exercised. The purchase price of $ 25,000 was forfeited in petitioner's tax year ended October 31, 1944, thus entailing a loss to petitioner in such amount in that tax year. Petitioner had no capital gains in such tax year. Held,…
1Opinion of the Court
OPINION.
Hill, Judge:
The first question is whether the-loss of $25,000 from the failure to exercise the option is deductible as an ordinary and necessary business expense under section 23 (a) (1) (A) of the Internal Revenue Code, as petitioner contends, or whether the deduction, if any, which may be allowable in respect of such loss is determinable under section 117 (g) (2) of the Code, as respondent contends. Section 117 (g) (2) provides as follows:(g) Gains and Losses Prom Short Sales, Etc. — For the purpose of this chapter—
*******(2) gains or losses attributable to the failure to exercise…
2Cases cited1 opinion
- Pearson v. CommissionerUnited States Tax Court · 1944
3Cited by1 opinion
- Nordblom Associates, Inc. v. CommissionerUnited States Tax Court · 1950