Henry v. Commissioner
United States Board of Tax Appeals
1. Debts due the petitioner, a stock broker, arising from over-extended margin accounts, not having been satisfactorily proved to be worthless and charged off within the taxable year 1919, can not be allowed as a deduction in computing net income for that year. 2. Petitioner was one of three partners engaged in the stock brokerage business.
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1. Debts due the petitioner, a stock broker, arising from over-extended margin accounts, not having been satisfactorily proved to be worthless and charged off within the taxable year 1919, can not be allowed as a deduction in computing net income for that year. 2. Petitioner was one of three partners engaged in the stock brokerage business. In November, 1919, the firm met with financial difficulties and petitioner, in the settlement of the firm's debts, paid not only his pro rata share, but also the share of one other partner. Held, when petitioner paid his partner's share of the firm's…
1Opinion of the Court
*1094OPINION.
MoRkis :
The first question in issue is whether or not the respondent erred in disallowing as a bad debt deduction in 1919, the aggregate amount of the four Smith accounts hereinabove referred to. The petitioner contends that they should have been allowed as a deduction ; the respondent on the other hand, contends that the amount of $63,038.20 sought to be deducted, was not ascertained to be worthless and charged off within the meaning of the statute and therefore the deduction should not be allowed.
Section 214 (a) (7) of the Revenue-Act of 1918 provides:(a) That in computing net…
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