Ames v. Commissioner
United States Board of Tax Appeals
1. Where there is a bona fide sale of a chose in action (in this case a debt due to the petitioner for money loaned) for a consideration, and the debt is not in fact worthless, the taxpayer sustained a deductible loss in the amount of the difference between the amount of the debt assigned and the amount of the consideration received. 2. In a prior year the taxpayer exchanged a note receivable of one corporation for the cancellation of his indebtedness to another corporation…
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1. Where there is a bona fide sale of a chose in action (in this case a debt due to the petitioner for money loaned) for a consideration, and the debt is not in fact worthless, the taxpayer sustained a deductible loss in the amount of the difference between the amount of the debt assigned and the amount of the consideration received. 2. In a prior year the taxpayer exchanged a note receivable of one corporation for the cancellation of his indebtedness to another corporation and an account receivable payable in monthly installments, with interest upon the unpaid balance. Of each monthly…
1Opinion of the Court
*628OPINION.
Smith :
The first issue is the deductibility of the claimed loss upon the sale of the balance of petitioner’s Class E indebtedness in the amount of $221,788.33 for $100. A similar sale was made in 1927, and a similar deduction allowed. The respondent has disallowed the deduction claimed in 1928 on the ground that the debt was worthless in 1927. The bona tides of neither the 1927 nor 1928 sale is questioned, and the fact that the sales were made to offset gains upon the sales of securities does not make the transaction illegal or warrant the disallowance of the claimed deduction if the…
2Cited by4 opinions
- Putnam v. CommissionerUnited States Board of Tax Appeals · 1934
- Ames v. CommissionerUnited States Board of Tax Appeals · 1933
- Ludorff v. CommissionerUnited States Board of Tax Appeals · 1939
- Withington v. CommissionerUnited States Tax Court · 1944