1931 BTA LEXIS 1544 | B.T.A. | 1931
Lead Opinion
We are of the opinion that the action of the respondent in refusing to allow the deduction as an ordinary and necessary business expense of the amounts paid by petitioner to the Transit Company in the years in question is correct. The facts in this proceeding show that the petitioner had borrowed money from the Transit Company, and in order to repay such amount had assigned to the Transit Company its right to reimbursement from the Eail-road under Paragraph NI of the contract of October 4,1917, between the petitioner and the Eailroad. Due to the fact that the Eailroad later made a demand for an additional amount of $52,955.16, the difference between the actual and the estimated cost of the construction of the track, and refused to reimburse the petitioner for the
The contract between the petitioner and the Transit Company was a separate transaction from that between petitioner and the Railroad, and the fact that the petitioner might not receive reimbursement from the Railroad does not have any effect on the transaction between the petitioner and the Transit Company. Regardless of whether the petitioner was reimbursed by the Railroad for the entire amount advanced for the construction of the track, it was still obligated to repay the Transit Company for the amounts loaned to it.
Judgment will be entered for the respondent.