Andrew v. Commissioner
United States Tax Court
Petitioners' son-in-law, Boyd, operated a livestock auction barn. A State statute required that a bond be posted to assure that Boyd would promptly account for and pay over the proceeds of all livestock consigned to him for sale. The surety would execute a bond only if petitioners would agree to indemnify it for any payments it might be required to make under the bond. Petitioners executed such an indemnity, and the surety simultaneously executed the bond.
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Petitioners' son-in-law, Boyd, operated a livestock auction barn. A State statute required that a bond be posted to assure that Boyd would promptly account for and pay over the proceeds of all livestock consigned to him for sale. The surety would execute a bond only if petitioners would agree to indemnify it for any payments it might be required to make under the bond. Petitioners executed such an indemnity, and the surety simultaneously executed the bond. Petitioners advanced $ 8,500 to Boyd to aid him in the business. Subsequently, the business collapsed, and petitioners advanced $ 10,000…
1Opinion of the Court
OPINION
Respondent concedes that petitioners expended $18,500 in 1965, all of which was lost in the operation of the livestock auction barn. The question is whether the losses fall within the confines of section 166, thus entitling petitioners to treat the $8,500 advanced to Boyd as a loss from a worthless nonbusiness debt and to treat the $10,000 expended to liquidate the amounts due customers of the barn as a worthless business debt or, alternatively, as a loss from a worthless nonbusiness debt.
First, as to the $8,500, section 166(a) allows as a deduction “any debt which becomes worthless…
2Cases cited10 opinions
- United States v. S. S. White Dental Manufacturing Co.Supreme Court of the United States · 1927
- Putnam v. CommissionerSupreme Court of the United States · 1956
- Clark v. CommissionerUnited States Tax Court · 1952
- Denver & Rio Grande Western Railroad Company v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1960
- Clark v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1953
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3Cited by44 opinions
- Cimarron Trust Estate v. CommissionerUnited States Tax Court · 1972
- Byrum v. CommissionerUnited States Tax Court · 1972
- Echols v. CommissionerUnited States Tax Court · 1989
- Daoust v. CommissionerUnited States Tax Court · 1994
- Cardosi v. CommissionerUnited States Tax Court · 1995
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