Neuberger v. Commissioner of Internal Revenue
| Decision Date | 28 January 1938 |
| Docket Number | Docket No. 78919. |
| Citation | 37 BTA 223 |
| Parties | HARRY H. NEUBERGER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
W. H. Friedman, Esq., for the petitioner.
J. R. Johnston, Esq., for the respondent.
The respondent having determined a deficiency in income tax of $9,021.24 for the taxable year 1932, the petitioner brings this proceeding for the redetermination thereof, claiming error by reason of (a) the erroneous disallowance of a loss upon the sale of securities held less than two years and, in the alternative, (b) the erroneous disallowance of taxes and commissions paid in connection with the purchase and sale of securities and, also in the alternative, (c) the erroneous disallowance of a loss of $327 sustained on a certain commodity transaction.
FINDINGS OF FACT.
The petitioner, an individual, resident of New York, New York, was a member of the New York Stock Exchange. He was engaged in the business of trading in securities on the floor of the Exchange for the partnership of Hilson & Neuberger, of which he was a member, executing orders on behalf of customers of the partnership and for his individual account.
During the taxable year the petitioner sustained a net loss, from his individual trading, from sales or exchanges of stocks and bonds which were not capital assets (as defined in section 101 of the Revenue Act of 1932), in the aggregate sum of $25,588.93. In computing such loss he deducted stock transfer taxes and commissions on sales of securities from the selling price and he added commissions paid upon the purchases of securities to the cost and treated them as a part of the cost of securities sold. Federal and New York stock transfer taxes on such sales amounted to $2,779.69. Commissions paid during the year upon purchases and sales, respectively, were $2,133.63 and $2,306.98. These taxes and commissions — the latter having been paid to the aforesaid firm of Hilson & Neuberger and reported by it for income tax purposes in its return for that year — were not separately deducted in the petitioner's return for 1932.
The petitioner's firm derived a profit of $142,802.29 in the taxable year from the sale of stocks and other securities which were not capital assets of the type hereinbefore indicated. It had other income (including commissions received) of $170,830.65 and deductions of $203,981.78, or net income of $109,651.06 .16. The petitioner's distributive share of said profits amounted to $36,000 of the first $94,000 and 45 percent of the remainder.
In addition to the above and foregoing the parties have stipulated the following:
During the calendar year 1932, petitioner incurred a loss of $327 upon the sale of a grain futures contract held less than two years. This loss was disallowed by the Commissioner in the determination of the deficiency here involved, but is now conceded as not being within the limitations set forth under Section 23 (r) of the Revenue Act of 1932, and this loss may now be allowed on the Rule 50 computation.
Petitioner's distributive share of the partnership profits for 1932 was increased by the Commissioner by $488.38, which item is not in dispute.
The petitioner now claims the right to deduct from taxable income for the year 1932, the aforesaid loss of $25,588.93 from individual trading in stocks and other securities, which deduction has been disallowed by the Commissioner; and in the alternative, the petitioner now claims the right to deduct the taxes and commissions referred to * * *.
The first error complained of by the petitioner relates to a loss sustained by him, personally, in the disposition of securities...
To continue reading
Request your trial