225 Wis. 102 | Wis. | 1937
The only ultimate question on this appeal is whether, in assessing the income of the plaintiff, Carl Pick, for the year 1927, he is entitled to a deduction of $10,000 for a loss which he claims to have sustained in that year. It is undisputed that he, as the holder of $15,000 of the stock of the Carl Pick Company (a Wisconsin corporation), lost that amount by reason of the corporation’s transfer of all of its assets on October 1, 1925, without receiving any consideration therefor excepting the transferee’s agreement to pay the corporation’s liabilities to its creditors. • Upon making that transfer, it ceased to transact any business or otherwise function as a corporation; and it failed in 1926, as well as thereafter, to file an annual report as a corporation in compliance with sec. 180.08 (1), Stats. Because it had transferred all of its prop'erty on October 1, 1925, there was nothing for liquidation and distribution among the stockholders.
In sub. (3) of sec. 71.04, Stats., it is provided, so far as is here material, that deductions from income reported for taxation under ch. 71, Stats., shall be allowed for “losses actually sustained within the year and not compensated by insurance or otherwise.” Consequently, in order to determine whether the plaintiff was entitled to a deduction in 1927 for the loss in question, it is necessary to determine whether he actually sustained that loss within that year. If, upon the transfer of its assets in 1925, there had remained in the corporation any assets which could possibly have been the subject of liquidation and distribution among its stockholders, then, by reason of the provision in sec. 71.02 (2) (b) 3, Stats., that “losses upon liquidation shall be recognized only in the year in which the corporation shall have made its final distribution,” the time of the final distribution thereof would have to be considered the time at which the loss was actually sustained. Even though it may seem very probable in a certain year that a stockholder’s stock has become worthless, he is not entitled to deduct the loss in that
By the Court. — The portion of the judgment appealed from is reversed, with directions that, in lieu thereof, judgment be entered in accordance with the opinion filed herein.