Ferguson v. Commissioner
United States Tax Court
Prior to 1951 the petitioner organized 3 corporations for the purpose of carrying on a single business of producing cinder blocks. He and his son owned all the stock and the petitioner financed the corporations by making loans to them and endorsing their notes. When insolvency forced dissolution of one of the companies in 1951, its debt owing to the petitioner became worthless.
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Prior to 1951 the petitioner organized 3 corporations for the purpose of carrying on a single business of producing cinder blocks. He and his son owned all the stock and the petitioner financed the corporations by making loans to them and endorsing their notes. When insolvency forced dissolution of one of the companies in 1951, its debt owing to the petitioner became worthless. The petitioner's activities in and immediately prior to 1951 were not so extensive as to constitute a trade or business of promoting, organizing, managing, financing, and making loans to businesses. Held, the debt was…
1Opinion of the Court
Atkins, Judge:
The respondent determined a deficiency in income tax for the calendar year 1951 in the amount of $60,171.69. The primary question at issue is whether the petitioner is entitled to a business bad debt deduction in the amount of $118,503.10 under section 23 (k) (1) of the Internal Revenue Code of 1939. Alternatively, the petitioner contends that to the extent of $100,000 this amount represented payment of his liability as endorser on a note and that to that extent he is entitled to a deduction under section 23 (e) (2) of a loss sustained in a transaction entered into for profit.
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2Cases cited16 opinions
- Higgins v. CommissionerSupreme Court of the United States · 1941
- Spring City Foundry Co. v. CommissionerSupreme Court of the United States · 1934
- Putnam v. CommissionerSupreme Court of the United States · 1956
- Burnet v. ClarkSupreme Court of the United States · 1932
- Dalton v. BowersSupreme Court of the United States · 1932
11 more not listed; retrieve them via the Exa API.
3Cited by24 opinions
- Rollins v. CommissionerUnited States Tax Court · 1959
- Zivnuska v. CommissionerUnited States Tax Court · 1959
- Pachella v. CommissionerUnited States Tax Court · 1961
- Shea v. CommissionerUnited States Tax Court · 1961
- S. D. Ferguson v. Commissioner of Internal RevenueCourt of Appeals for the Fourth Circuit · 1958
19 more not listed; retrieve them via the Exa API.