Menihan v. Commissioner
United States Board of Tax Appeals
LOSSES - PAYMENTS MADE IN COMPROMISE OF LIABILITIES UNDER CONTRACTS OF GUARANTY AND ENDORSEMENT. - Petitioner was sole stockholder of a corporation which in 1924 became insolvent and went into the hands of a creditiors' committee, with a large aggregate indebtedness of which petitioner was either guarantor or endorser to the extent of $655,695.14. Petitioner transferred all his stock to the creditiors' committee to be held by it under a voting trust agreement, and the…
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LOSSES - PAYMENTS MADE IN COMPROMISE OF LIABILITIES UNDER CONTRACTS OF GUARANTY AND ENDORSEMENT. - Petitioner was sole stockholder of a corporation which in 1924 became insolvent and went into the hands of a creditiors' committee, with a large aggregate indebtedness of which petitioner was either guarantor or endorser to the extent of $655,695.14. Petitioner transferred all his stock to the creditiors' committee to be held by it under a voting trust agreement, and the creditors took charge of the corporation, retaining petitioner as manager. The debts of the corporation were compromised and…
1Opinion of the Court
*174OPINION.
Black :
The only question for decision is whether the amounts of $16,469.34 and $68,645.09 paid by petitioner in 1926 and 1927, respectively, on account of his liabilities as endorser or guarantor were deductible losses for those years, or capital expenditures or investments.
Pertinent provisions of the Revenue Act of 1926 are:
Sec. 214. (a) In computing net income there shall be allowed as deductions:
*******(4) Losses sustained during the taxable year and not compensated for by insurance or otherwise, if incurred in trade or business;(5) Losses sustained during the taxable year and not…
2Cases cited1 opinion
- Howell v. CommissionerUnited States Board of Tax Appeals · 1931
3Cited by1 opinion
- Menihan v. CommissionerUnited States Board of Tax Appeals · 1933