1936 BTA LEXIS 575 | B.T.A. | 1936
Lead Opinion
OPINION.
On his return for 1931 the petitioner deducted the remainder of an alleged net loss carried over from 1929. Revenue Act of 1928, sec. 117. The Commissioner in the notice of deficiency revised the 1929 net loss by a reduction of $28,010 representing the
The petitioner disavows any claim for a deduction of either the whole amount of his Florida losses or the excess of such losses above the amount of his Mexican gains. In this disclaimer his position follows earlier decisions to the effect that losses in illegal transactions and expenses of an illegal business may not be recognized among deductions in the computation of taxable net income. Great Northern Railway Co. v. Commissioner. (C. C. A., 8th Cir.), 40 Fed. (2d) 372; certiorari denied, 282 U. S. 855; Burroughs Building Material Co. v. Commissioner (C. C. A., 2d Cir.), 47 Fed. (2d) 178; Chicago, Rock Island & Pacific Railway Co. v. Commissioner (C. C. A., 7th Cir.), 47 Fed. (2d) 990; certiorari denied, 284 U. S. 618; Terminal Railroad Association of St. Louis v. Commissioner (C. C. A., 8th Cir.), 61 Fed. (2d) 166; certiorari denied, 288 U. S. 604, 607; Gould Paper Co. v. Commissioner (C. C. A., 2d Cir.), 72 Fed. (2d) 698; Sarah Backer et al., Executors, 1 B. T. A. 214; James P. McKenna, 1 B. T. A. 326; Mitchell M. Frey, Jr., et al., Executors, 1 B. T. A. 338; Norvin R. Lindheim, 2 B. T. A. 229; M. L. Heide, 2 B. T. A. 451; John Stephens, 2 B. T. A. 724; Columbus Bread Co., 4 B. T. A. 1126; Wolf Manufacturing Co., 10 B. T. A. 1161; Atlantic Terra Cotta Co., 13 B. T. A. 1289; Bonnie Brothers, Inc., 15 B. T. A. 1231; M. Rea Gano, 19 B. T. A. 518, 529; E. F. Simms, 28 B. T. A. 988, 1034; Lawrence A. Wagner, 30 B. T. A. 1099. Whether this disclaimer is likewise supported by the fact that the loss was incident to recreation and, therefore, not to a transaction entered into for profit, it is not necessary to consider. See Beaumont v. Helvering, 73 Fed. (2d) 110; certiorari denied, 294 U. S. 715, and Citizens & Southern National Bank v. United States (Ct. Cls.), 14 Fed. Supp. 915.
The petitioner’s contention is that, aside from the question of his right to include the Florida loss directly among his deductions, he is in any event entitled to treat such loss as wiping out his Mexican gain, and thus precluding the Commissioner’s inclusion of such gain . within his 1929 income. There is, in our opinion, no greater reason to permit the application of the losses in illegal gambling to offset the gains from legal gambling than there is for their direct deduction. It is now established without any conflicting decisions that the illegality of the occupation or the transactions in which a taxpayer engages deprives him of any claim to the use of losses or expenses in reducing his taxable net income. In Burroughs Building Material
Judgment will Toe entered for the respondent.