1932 BTA LEXIS 1303 | B.T.A. | 1932
Lead Opinion
The evidence refutes the respondent’s reasons for disallowing the claimed deductions for losses upon the sales of stock in the taxable years before us. The sales were made “ with good faith; without fraud or deceit.” Cf. Corrado & Galiardi, Inc., 22 B. T. A. 847. Thereafter, the petitioner had no interest in or control over
* * * It is perfectly legal and proper for a taxpayer to sell such assets at a price representing their reduced value and thus to sustain a deductible loss which is allowed him by the statute. United States v. Isham, 17 Wall. 496; Appeal of The Pennsylvania Co., etc., 2 B. T. A. 48; Appeal of Benjamin T. Britt, 2 B. T. A. 53; Appeal of Harold B. Clark, 2 B. T. A. 555.
In computing the deductions allowable under the statute (section 214 (a) (5) of the Revenue Acts of 1924 and 1926), the basis to be used for the stock acquired before March 1, 1918, is its cost or fair market value on that date, whichever is greater (section 204 (b) of the Revenue Acts of 1924 and 1926), and the basis to be used for the stock acquired by purchase after that date is its cost (section 204 (a), Revenue Acts of 1924 and 1926). The petitioner has established only the cost, thereby waiving any benefit that might result from proving a March 1,1913, value in excess of the cost of the stock acquired prior to that date. Petitioner has not identified the one share of common stock purchased in 1920 for $80 as being in any particular lot sold; because of his failure to so identify this share, it will be allocated to the lot upon the sale of which he is claiming the greatest loss, thus bearing “ down heavily upon the petitioner whose duty it was to prove ” the larger loss, if larger loss there was. Cf. American Cigar Co., 21 B. T. A. 464, 490. This allocation will be in accord with the “ first in, first out ” rule, since petitioner sold 848 shares of this stock and we have evidence as to the time of purchase of only 601 shares of this stock. Cf. ’William P. Jenks, 22 B. T. A. 910. The basis for computing the loss upon the sale in 1928 of the preferred stock which had been acquired by petitioner under the will of his uncle is its value “ at the time of the distribution to the taxpayer” (section 113 (a) (5), Revenue Act of 1928). This value has been found to be $80 per share. The deductible losses should be allowed accordingly. Cf. J. Harvey Ladew, 22 B. T. A. 443; Shepard Co., 22 B. T. A. 1368; A. J. Wallace, 23 B. T. A. 858; Deeds v. Commissioner, 47 Fed. (2d) 695.
From the record we can not determine that the respondent erred in disallowing the deduction of $5,465.45 claimed as a bad debt in 1925. The evidence tends to support the petitioner’s contention that this amount was the net balance of the judgment and account against Marlette Crouse, petitioner’s brother, who died in 1925,
Judgment will J>e entered under Rule 50.