Putnam Nat. Bank v. Commissioner of Internal Revenue
Decision Date | 27 May 1931 |
Docket Number | No. 6173.,6173. |
Citation | 50 F.2d 158 |
Parties | PUTNAM NAT. BANK v. COMMISSIONER OF INTERNAL REVENUE. |
Court | U.S. Court of Appeals — Fifth Circuit |
J. V. Walton and Thos. B. Dowda, both of Palatka, Fla., for petitioner.
G. A. Youngquist, Asst. Atty. Gen., Sewall Key, Sp. Asst. to Atty. Gen., C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and James K. Polk, Jr., Sp. Atty. Bureau of Internal Revenue, both of Washington, D. C., J. Louis Monarch and Norman D. Keller, Sp. Assts. to Atty. Gen., for respondent.
Before BRYAN, SIBLEY, and HUTCHESON, Circuit Judges.
Petitioner, having in 1921 made a partial charge off and had allowed as a bad debt a deduction of $18,000 on account of bonds held by it, was required by the Commissioner when that amount was collected on the bonds in 1925, to return it as taxable income for that year. On appeal to the Board of Tax Appeals, the action of the Commissioner was sustained, and the case comes here for review of the Board's decision.
The facts, as stipulated and found by the Board, are: That petitioner, a national bank, in 1931 accepted in lieu of notes due it thirty-nine bonds of the face value of $1,000. That, after controversy and protest, petitioner was ordered by the bank examiner to write off 60 per cent. of their face.
As the Board noted in its opinion, * * *"They "fall far short of establishing that the charge off as made in 1921 was improper."
It seems to be taken for granted, as indeed it must be, that, if the 1921 deduction was properly claimed and allowed; that is, if in law and in fact the bonds were in that year ascertained to be to that extent worthless, any later collection of such debt must be returned as income. Carr v. Com'r (C. C. A.) 28 F.(2d) 551; Davidson v. Lucas, 59 App. D. C. 176, 37 F.(2d) 806; Sanford & Brooks Co. v. Com'r (C. C. A.) 35 F.(2d) 312, 314; Burnet v. Sanford & Brooks Co., 282 U. S. 359, 51 S. Ct. 150, 75 L. Ed. 383; T. D. R. 62, art. 151; T. D. R. 60, art. 50; Brewster v. Gage, 280 U. S. 327, 50 S. Ct. 115, 74 L. Ed. 457; Fawcus Machine Co. v. U. S., 282 U. S. 375, 51 S. Ct. 144, 75 L. Ed. 397.
Petitioner pitches its case against the action of the Board upon the proposition that the debt was not in fact determined to be worthless; that no loss in fact actually occurred in 1921; that therefore the moneys received in 1925 were not income, but merely payment of the principal due on the debt.
To this contention respondent opposes two propositions: (1) That the record presents...
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