1925 BTA LEXIS 2746 | B.T.A. | 1925
Lead Opinion
This appeal raises the question of the right of an individual to deduct from gross income in his income-tax return for 1920 an amount spent by him in regaining possession of a private stock of liquors seized by police officers and an estimated amount representing a loss in respect of liquors not returned to him upon the order of the court in 1921.
With respect to the right of the taxpayer to deduct an estimated loss of $1,000 in connection with liquors not returned to him in 1921, counsel for the Commissioner moved at the hearing that the claim for the deduction of the $1,000 be peremptorily denied inasmuch as in no case was it a loss which was sustained by the taxpayer in the year 1920, the position of the Commissioner being that the taxpayer knew nothing of the loss at December 31, 1920, and therefore that the claimed loss discovered in 1921 was not a legal deduction from gross income in 1920.
No evidence is before this Board with respect to the exact amount of liquors seized by the police officers in 1920, nor as to the exact amount of the liquors seized but not returned to him. From the notation made by the United States Marshal upon the marshal’s return, it may be assumed that a portion of the liquors seized was not returned to the taxpayer but what the amount was the Board is unable to determine. It is also unable to determine, by reason of lack of evidence, the cost to the taxpayer of the liquors. It is
The Revenue Act of 1918, under the provisions of which the taxpayer made his income-tax return for 1920, permits an individual taxpayer to deduct from gross income in his income-tax return •
(1) All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business * * *. Section 214(a) (1).
It also permits the deduction from gross income of—
(6) Losses sustained during the taxable year of property not conneded with the trade or business (but in the case of a nonresident alien individual only property within the United States) if arising from fires, storms, shipwreck, or other casualty, or from theft, and if not compensated for by insurance or otherwise. Section 214 (a)(6).
The evidence is clear that the taxpayer was not engaged in the liquor business or in the buying or selling of liquors. The amounts paid for court costs were clearly not a deduction from gross income as ordinary and necessary expenses- At the hearing counsel for the taxpayer argued that storage charges for the liquor and court costs were a legal deduction from gross income under the provisions of the taxing act which permits the deduction from gross income of losses sustained from a casualty. Section 214(a) (6) of the Revenue Act of 1918. We do not think that the storage charges and court costs are deductible from gross income as a loss from a casualty similar to “fires, storms, shipwreck,” and the rule of ejusdem generis is applicable here. In order that a loss sustained by an individual may be deductible from gross income as a casualty under this provision of íaw it must be made to appear that the casualty was of a similar character to a fire, storm, or a shipwreck. We do not discover such a similarity in the case at bar. The seizure by police officers and revenue agents of the taxpayer’s private stock of liquors was not such a casualty as is contemplated by section 214(a) (6) of the Revenue Act of 1918. Furthermore, it is to be noted that the payment by the taxpayer of the storage charges and court costs and the premium upon the bond, was purely voluntary upon his part. Although we may assume that it was to tbe taxpayer’s interest to protect his right to the possession of the private stock of liquors, the expenditure of the money for the storage charges, etc., was purely a personal expense.