Perry v. Commissioner
United States Tax Court
Held: 1. Bad debt deduction claimed under section 23 (k) ( 1) of the Internal Revenue Code by petitioners, the majority stockholders and officers of the corporate debtor, disallowed because debt did not "become worthless" within the taxable year. 2. Issue not raised by assignment of error in petition is not before the Court for consideration. 3. Deduction for medical expenses disallowed because those expenses did not exceed 5 per centum of petitioners' adjusted gross income…
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Held: 1. Bad debt deduction claimed under section 23 (k) ( 1) of the Internal Revenue Code by petitioners, the majority stockholders and officers of the corporate debtor, disallowed because debt did not "become worthless" within the taxable year. 2. Issue not raised by assignment of error in petition is not before the Court for consideration. 3. Deduction for medical expenses disallowed because those expenses did not exceed 5 per centum of petitioners' adjusted gross income as increased by other adjustments herein. Sec. 23 (x), I. R. C.
1Opinion of the Court
OPINION.
Black, Judge:
The major issue we are called upon to decide is whether petitioners are entitled to a $20,000 bad debt deduction in 1949 for money lent to Perry’s Flower Shops, Inc., a corporation of which they were majority stockholders, officers, and directors. Respondent makes three contentions:(1) A business bad debt deduction is not allowable under section 23 (k) (1) of the Code1 because the debt did not become worthless in 1949. The debt was gratuitously forgiven by petitioners and, therefore, constitutes a capital contribution under section 29.22 (a)-13 of Regulations 111.(2) If…
2Cases cited7 opinions
- A. Finkenberg's Sons, Inc. v. CommissionerUnited States Tax Court · 1951
- New York Water Service Corp. v. CommissionerUnited States Tax Court · 1949
- Redman v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1946
- Camp Wolters Enterprises, Inc. v. CommissionerUnited States Tax Court · 1954
- H. D. Lee Mercantile Co. v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1935
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3Cited by33 opinions
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- La Staiti v. CommissionerUnited States Tax Court · 1980
- Jessup v. CommissionerUnited States Tax Court · 1977
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