Cullinan v. Commissioner of Internal Revenue

• Decision Date: 12 May 1930
• Docket Number: Docket No. 29506.
• Citation: 19 BTA 930
• Parties: J. S. CULLINAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

19 B.T.A. 930 (1930)

J. S. CULLINAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 29506.

Board of Tax Appeals.

Promulgated May 12, 1930.

John Walsh, Esq., and L. A. Spiess, Esq., for the petitioner.

J. E. Marshall, Esq., and C. A. Ray, Esq., for the respondent.

In this proceeding the petitioner seeks a redetermination of his income-tax liability for the calendar year 1922, for which the respondent has determined a deficiency in the amount of $23,629.79. The petitioner alleges that the respondent committed the following errors in his determination: (1) In adding to petitioner's taxable income $12,000 received from the American Republics Corporation and the Galena-Signal Oil Co. as reimbursement for certain business expenses incurred and paid while engaged in business matters for the said corporation; (2) in refusing to permit the petitioner to take a deduction of $29,224.59 as a debt determined to be worthless and uncollectible in the year 1922; and (3) in adding to petitioner's taxable income for the year 1922 the sum of $8,888.30 alleged to represent a profit on the sale of real estate. At the hearing the respondent abandoned his contention as to the inclusion of $12,000 in petitioner's taxable income.

FINDINGS OF FACT.

It has been stipulated that the findings of fact made by the Board in J. S. Cullinan, 5 B. T. A. 996, being an appeal of the same taxpayer for the years 1919 to 1921, inclusive, may be adopted as the facts in this proceeding. In the former proceeding it was found that the petitioner acquired and improved Shadyside addition to the city of Houston at a total cost of $228,383.84, and that in 1922 he sold lot X in this subdivision to E. H. Buckner for $15,340. The findings of fact in J. S. Cullinan, supra, in so far as they are pertinent and relevant to any issue involved in this proceeding, are hereby adopted and made a part hereof. The petitioner's books of account were kept on the cash receipts and disbursements basis.

In 1922 the campaign committee for George E. B. Peddy, candidate for United States Senator from Texas, sought to get thirty men to contribute $5,000 each for such purpose. The petitioner agreed to and made such $5,000 contribution. The whole number of subscribers could not be immediately procured, and the committee was in great need of funds to carry on its campaign. The petitioner agreed to advance and lend the committee $30,000, he and the committee, through its chairman, agreeing and believing that such was to be repaid to the petitioner out of the receipts of the committee from expected contributions. As the campaign closed it was found that the receipts from contributions fell greatly below what was expected. Post-campaign efforts were extensively made by the chairman to procure contributions to pay off the deficit, and out of the final balance on hand after payment of campaign expenses the petitioner's loan was reduced $775.41, leaving a balance unpaid of $29,224.59.

OPINION.

BLACK:

At the hearing the respondent withdrew his contention in regard to the $12,000 received from American Republics Corporation and the Galena-Signal Oil Co., the same issue having been decided adversely to him in the case of this taxpayer for prior years, reported in 5 B. T. A. 996. Therefore, on this issue decision is for the petitioner. In the prior case also was at issue the method of computing profits on the sale of lots in a subdivision. The facts were stipulated to be the same and the lot in question in this proceeding was found to have been sold for $15,340. No new evidence was introduced and, in the final determination of the tax against petitioner under Rule 50, respondent should use the same method of computing the profit on the lot in Shadyside addition to...