Chahoon v. Mealey

This issue arises out of an item of $48,000, entered as a deduction in petitioner’s income tax return for the year 1936. It was a loss sustained by him on account of his participation in a so-called junior equity agreement entered into by him and certain-other individuals for the purpose of restoring the impaired capital and surplus of the Plattsburg National *51Bank and Trust Company so that the bank could continue to operate. The statute, Tax Law, section 360, allows as deductions in computing net income “ All the ordinary and necessary expenses paid or incurred during the taxable year in…