McClain v. Commissioner

SIBLEY, Circuit Judge.

Haying owned for seven years $15,000 par value of Cameron County Water Improvement District coupon bonds, in 1935 the taxpayer accepted from the District for them $7,476.75, and in his tax return claimed a deduction of $7,523.25 as for a bad debt charged off. The Board of Tax Appeals upheld the Commissioner in his ruling that the loss was not a bad debt under Sect. 23 (k) of the Revenue Act of 1934, 26 U.S.C.A.Int.Rev.Acts, but fell under a new provision, Sect. 117(f) of that Act, whereby the loss on the bonds was to be treated as a capital loss. This is the sole…