Smith v. Commissioner
United States Tax Court
Held, petitioner was not engaged in the trade or business of promoting corporations for gain on their sale in the ordinary course of such business and, therefore, his loss on a debt arising from advances to a wholly owned corporation was a nonbusiness bad debt deductible only as a short-term capital loss subject to the limitations of sec. 1211, I.R.C. 1954. Whipple v. Commissioner, 373 U.S. 193 (1963), rehearing denied 374 U.S. 858 (1963).
1Opinion of the Court
FeatheRston, Judge:
Respondent determined a deficiency of $8,-886.37 in petitioners’ Federal income tax for 1967. The issue for decision is whether petitioners are entitled to a business bad debt deduction, as permitted by section 166(a),1 for a loss incurred on loans to their wholly owned corporation, or whether they are limited by section 166(d) to a nonbusiness bad debt deduction for their loss.
FINDINGS OF FACT
At the time the petition was filed herein, petitioners Earl M. Smith and Ruth A. Smith were legal residents of Longwood, Fla. Although a joint Federal income tax return was filed for…
2Cases cited11 opinions
- Whipple v. CommissionerSupreme Court of the United States · 1963
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- Putnam v. CommissionerSupreme Court of the United States · 1956
- Burnet v. ClarkSupreme Court of the United States · 1932
- United States v. GeneresSupreme Court of the United States · 1972
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3Cited by5 opinions
- Frantz v. CommissionerUnited States Tax Court · 1984
- Farrar v. CommissionerUnited States Tax Court · 1988
- Frantz v. CommissionerUnited States Tax Court · 1984
- Ray v. CommissionerUnited States Tax Court · 1981
- Smith v. CommissionerUnited States Tax Court · 1974