Oshei v. COMMISSIONER OF INTERNAL REVENUE

• Decision Date: 07 August 1934
• Docket Number: Docket No. 63639.
• Citation: 31 BTA 23
• Parties: CHARLES H. OSHEI, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

31 B.T.A. 23 (1934)

CHARLES H. OSHEI, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 63639.

Board of Tax Appeals.

Promulgated August 7, 1934.

Benjamin J. Manley, Esq., for the petitioner.

B. M. Coon, Esq., for the respondent.

OPINION.

VAN FOSSAN:

The respondent determined a deficiency of $2,404.28 for the year 1929. This finding was consequent on his action in holding a certain sale of stock to be a short sale not completed within the taxable year. The specific error set out is the failure to allow a deduction of $41,575.91 alleged loss on a sale of 2,000 shares of stock of the Trico Products Corporation.

During 1929 petitioner maintained margin accounts with various brokers. In December of that year the firm of Hornblower & Weeks in New York was calling for additional margin. Petitioner, on December 23, 1929, asked another broker in Detroit, Hentz & Co., to sell 2,000 shares of Trico stock being carried in the Hornblower & Weeks account, send the money to Hornblower & Weeks, and pick up the stock for delivery, thus putting their account in better shape. All instructions were oral. The petitioner left Detroit on December 24 and was out of touch with the situation until early in January 1930.

Hentz & Co. put through the order to sell 2,000 shares of Trico stock in due course. That evening they sent two letters to petitioner's office for signature, one being authority to Hentz & Co. to receive the stock, and the other being an order on Hornblower & Weeks to deliver the stock to Hentz & Co. against payment of a named amount ($60,000). Being unable to locate petitioner, Hentz & Co. used 700 shares of Trico stock in its hands and borrowed from business friends sufficient additional stock to accomplish delivery on the sale. The exact date of such delivery was not proved.

Petitioner returned to Detroit sometime in January and thereafter signed the letters authorizing Hentz & Co. to receive the stock and ordering Hornblower & Weeks to deliver the stock against payment. The stock was actually delivered by Hornblower & Weeks to Hentz & Co. on January 27, 1930.

On December 24, 1929, petitioner had no Trico Products Corporation stock with Hentz & Co. On the books of Hentz & Co. under date of December 24, 1929, an entry appears indicating sale by them of 2,000 shares of Trico, followed by the letter "S", which was explained as an abbreviation for "Short." On December 31 the accounts of Hornblower & Weeks showed petitioner's account to contain 4,967 shares of Trico, followed by the letter "L"; on January...