Betts v. Commissioner
United States Tax Court
Electronics, a limited partnership, acquired at face value a $ 200,000 note of Gibraltar, in addition to stock and warrants. Electronics also furnished, for compensation, limited consulting services to Gibraltar. Gibraltar eventually became insolvent, and Electronics sold its shares of Gibraltar stock to Acme, which also guaranteed payment of the note.
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Electronics, a limited partnership, acquired at face value a $ 200,000 note of Gibraltar, in addition to stock and warrants. Electronics also furnished, for compensation, limited consulting services to Gibraltar. Gibraltar eventually became insolvent, and Electronics sold its shares of Gibraltar stock to Acme, which also guaranteed payment of the note. In 1966, Gibraltar and Acme went into receivership, and no amount was received by Electronics on the note or on the guaranty. Held, the debt of Gibraltar was not created or acquired in connection with a trade or business of Electronics. Held,…
1Opinion of the Court
Simpson, Judge:
The respondent determined a deficiency of $2,172.30 in the Federal income tax of the petitioners for the year 1966. There are two issues for decision: (1) Whether a loan by Electronics, a limited partnership, was created or acquired in connection with its trade or business, and (2) whether the failure to perform on a guaranty of such loan gives rise to a loss deductible under section 165 of the Internal Revenue Code of 1954.1
FINDINGS OP PACT
Some of the facts have been stipulated, and those facts are so found.
The petitioners, David H. Betts and Joan O. Betts, are husband and…
2Cases cited12 opinions
- Spring City Foundry Co. v. CommissionerSupreme Court of the United States · 1934
- Whipple v. CommissionerSupreme Court of the United States · 1963
- Millsap v. CommissionerUnited States Tax Court · 1966
- I. Hal Millsap, Jr., and Frances Millsap v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1968
- Imel v. CommissionerUnited States Tax Court · 1973
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3Cited by5 opinions
- Benak v. CommissionerUnited States Tax Court · 1981
- Benak v. CommissionerUnited States Tax Court · 1981
- Betts v. CommissionerUnited States Tax Court · 1974
- Eberhart v. CommissionerUnited States Tax Court · 1977
- Hoogerwerf v. CommissionerUnited States Tax Court · 1976