1927 BTA LEXIS 2745 | B.T.A. | 1927
Lead Opinion
The amount expended by petitioner in 1922 is claimed under section 214(a) (4) of the Revenue Act of 1921 providing for the deduction of:
Losses sustained during the taxable year and not compensated ior by insurance or otherwise, if incurred in trade or business.
The word “ loss ” is a comprehensive one. As said in Electric Reduction Co. v. Lewellyn, 11 Fed. (2d) 493; 5 Am. Fed. Tax Rep. 5897:
“ Failure to keep that which one has is a loss.” Foehrenbach v. German-American Title & Trust Co., 6 A. 561, 217 Pa. 332, 12 L. R. A. (N. S.) 465, 118 Am. St. Rep. 916. There are many kinds of loss: Money out of pocket; a judgment, changing the status from solvency to insolvency. Schambs v. Fidelity & Casualty Co., 259 F. 55, 58, 170 C. C. A. 55, 6 A. L. R. 1231.
Petitioner here spent the sum of $5,748.94 and was unable to secure reimbursement due to the failure of the project. Had the venture been successful, he would have been repaid. As the matter stood at the close of the taxable year he was out of pocket the sum claimed. It was, as we see it, a loss “ not compensated for.” We are further of the opinion that the loss was “ incurred in trade or business ” in that the furtherance of the business of the company of which he was president was legally and logically his business.
Judgment will be entered on 15 days' notice, under rule 50.