Schoenhut v. Commissioner
United States Board of Tax Appeals
1. The petitioners were owners of common stock of the A. Schoenhut Co., which was declared by the court to be insolvent in 1935. The machinery and substantially all of its assets, except the dismantled plant, were disposed of in 1936. In 1937 the remaining assets of the bankrupt were sold at public sale for the nominal amount of $125, the purchasers thereof being the mortgagees of the property.
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1. The petitioners were owners of common stock of the A. Schoenhut Co., which was declared by the court to be insolvent in 1935. The machinery and substantially all of its assets, except the dismantled plant, were disposed of in 1936. In 1937 the remaining assets of the bankrupt were sold at public sale for the nominal amount of $125, the purchasers thereof being the mortgagees of the property. Held, that the petitioners' shares of common stock became worthless prior to 1937. 2. Petitioners Otto Schoenhut and Minnie Schoenhut filed a joint income tax return for 1937 and the respondent…
1Opinion of the Court
*818OPINION.
Smith:
The principal question presented by this proceeding, is whether or not the petitioners sustained deductible losses in 1937 upon their investments in shares of common stock of the Schoenhut Co. The respondent has disallowed the claimed loss deductions upon the ground, as stated in his deficiency notices, that the shares of stock became worthless prior to 1937. The burden of proof is upon the petitioners to show otherwise. They contend that the “identifiable event” which fixed the loss occurred in 1937, at which time the Schoen-hut Co. lost all of its properties as a result of the…
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