Corrado & Galiardi, Inc. v. Commissioner of Internal Revenue
| Decision Date | 20 March 1931 |
| Docket Number | Docket No. 41246. |
| Parties | CORRADO & GALIARDI, INC., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Clarence A. Miller, Esq., for the petitioner.
J. L. Backstrom, Esq., for the respondent.
The Commissioner determined a deficiency in tax of $2,198.79 for the calendar year 1926. The error assigned is the failure to allow a deduction of $18,960 representing a loss incurred in the sale of some stock.
FINDINGS OF FACT.
The petitioner is a Pennsylvania corporation with its principal place of business in Connellsville, Pa. All of its stock was owned during the period here in question by G. Corrado, Philip Galiardi, and their families. G. Corrado was president of the petitioner.
On or about February 4, 1924, a partnership known as Corrado & Galiardi purchased 422 shares of Southern Connellsville Coke Company stock, for which it gave its check in the amount of $12,960, its promissory note in the amount of $15,000 endorsed by G. Corrado and Philip Galiardi, and, as collateral security, the 422 shares of Southern Connellsville Coke Company stock.
After several months the petitioner became the owner of the above mentioned shares under circumstances not shown by the record.
On or about December 12, 1924, the petitioner purchased 135 shares of Southern Connellsville Coke Company stock for $4,000.
On December 30, 1926, by which time $2,000 had been paid on account of the principal of the original loan of $15,000 above referred to, the petitioner executed its promissory note for $13,000 endorsed by G. Corrado and Philip Galiardi. On the same day G. Corrado and Philip Galiardi purchased the 557 shares of Southern Connellsville Coke Company stock from the petitioner by assuming payment of the note of $13,000.
Under date of December 31, 1926, the following entries were made on the petitioner's journal:
Dr.Cr
Notes Payable ______________________________________ $13,000.00
Southern-Connellsville Coke Company stock ______________________ $13,000.00
Southern-Connellsville Coke Company's stock was
sold to G. Carrado and P. Galiardi in payment
for which they assume note at Citizens National
Bank
Profit and Loss ________________________________ 18,960.00
Southern-Connellsville Coke Company stock ______________________ 18,960.00
__________
To charge Profit & Loss with loss incurred from their sale of
Southern-Connellsville Coke Company's stock to G. Corrado
and P. Galiardi
The note was renewed every sixty or ninety days. Interest on it was paid and the principal amount was reduced from time to time. All of the renewal notes were given by the petitioner, all save the last were endorsed by G. Corrado and Philip Galiardi, and the 422 shares of Southern Connellsville Coke Company stock remained as collateral security for each. The last note was one for $500 given May 24, 1929, and was endorsed by G. Corrado only.
The petitioner paid the interest on the note of $13,000 and the renewals of that note. It also made payments on the principal of the note until it had paid the entire amount of the principal. The last payment was one of $250 on July 22, 1929. Every time that it made a payment on the principal or interest of the note, it charged one-half of the total amount paid to the account of G. Corrado and one-half to the account of Philip Galiardi. Each of these accounts showed a credit balance at the end of the year 1929.
The stock was never reacquired by the petitioner. It became entirely worthless a year or so after the transaction here in question.
The stock certificate book of the Southern Connellsville Coke Company shows that stock certificates were issued as follows:
...To continue reading
Request your trial