50 F.2d 158
5th Cir.
1931
HUTCHESON, Circuit Judge.

Petitioner, having in 1921 made a partial charge off and had allowed as a bad debt a deduction of $18,000 on account of bonds held by it, was required by the Commissioner when that amount was collected on the bonds in 1925, to return it as taxable income for that year. On appeal to thе Board of Tax Appeals, the action of the Commissioner was sustained, and the case comes here for review of the Board’s decision.

The facts, as stipulated and found by the Board, are: That petitioner, a national hank, in 1931 accepted in lieu of notes due it thirty-nine bonds of the face value of $1,000. That, after controversy and protest, petitioner was ordered by the bank examiner to write off 60 per cent, of their face. “On Decembеr 23,1921 petitioner’s directors voted to charge off 60% of the face value of the bonds pursuant to the instructions of the chief national hank examiner and on December 31,1921 the amount of $23,400 was charged to profit and loss. The amount so charged off was claimed as a deduction by petitioner in its return, for 1921 and allowed by the respondent. The face value of the bonds was subsequently paid * * * in 1925, $30;000. Sixty per cent of this amount was on petitioner’s booká credited tо profit and loss, and reported as taxable income in its return.”

As the Board noted in its opinion, “though the petitioner does contend that the charge off and deduction was not a propeí one, because no loss was actually sustained in 1921 in respect of the bonds nоthing was offered to show whether ‍​​​‌​​​​‌​​​​‌​​‌‌‌‌​​‌​‌​‌​‌​‌​‌‌​‌‌​‌‌‌‌​‌​​‌​‍or not petitioner was warranted in making the charge off. Thе stipulated facts do not cover the matter of partial worthlessness in 1921. * * * ” They “fall far short оf establishing that the , charge off as made in 1921 was improper.”

It seems to he taken for grantеd, as indeed it must be, that, if the 1921 deduction was properly claimed and allowed; that is, if in law and in fact the bonds were in that year ascertained to be to that extent worthless, any later collection of such debt must be retumed.as income. Carr v. Com’r (C. C. A.) 28 F.(2d) 551; Davidson v. Lucas, 59 App. D. C. 176, 37 F.(2d) 806; Sanford & Brooks Co. v. Com’r (C. C. A.) 35 F.(2d) 312, 314; Burnet v. Sanford & Brooks Co., 282 U. S. 359, 51 S. Ct. 150, 75 L. Ed. 383; T. D. R. 62, art. 151; T. D. R. 60, art. 50; Brewster v. Gage, 280 U. S. 327, 50 S. Ct. 115, 74 L. Ed. 457; Fawcus Machine Co. v. U. S., 282 U. S. 375, 51 S. Ct. 144, 75 L. Ed. 397.

Petitionеr pitches its case against the action of, the Board upon the proposition that ‍​​​‌​​​​‌​​​​‌​​‌‌‌‌​​‌​‌​‌​‌​‌​‌‌​‌‌​‌‌‌‌​‌​​‌​‍the debt was not in fact determined to be worthless; that no loss in fact actually oo- *159 currеd in 1921; that therefore the moneys received in 1925 were not income, but merely payment of the principal due on the debt.

To this contention respondent opposes two prоpositions: (1) That the record presents nothing from whieh it could be found that the taxpayer did not ascertain and declare a partial loss on account of the bonds; on the сontrary, it affirmatively establishes that it did, and that, what would be petitioner’s rights if the record were otherwise, presents for decision, not an issue having real substance, but a mere hypostasis. (2) If рetitioner could show that there was no loss, it would, because in 1921 it claimed and received a deduction as for a loss, be now es-topped from doing so.

Respondent’s first proрosition is correct, ‍​​​‌​​​​‌​​​​‌​​‌‌‌‌​​‌​‌​‌​‌​‌​‌‌​‌‌​‌‌‌‌​‌​​‌​‍and disposes of petitioner’s appeal.

“The power оf taxation is a fundamental and imperious necessity of all government.” Tyler v. U. S., 281 U. S. 503, 50 S. Ct. 356, 359, 74 L. Ed. 991, 69 A. L. R. 758.

“The Sixteenth Amendment was adopted to enable the government to raise revenue by taxation. It is the essеnce of any system of taxation that it should produce revenue ascertainable, аnd payable to the government, at regular intervals. Only by such a system is it practicable to produce a regular flow of income and apply methods of accounting, assessmеnt, and collection capable of practical operation.” Burnet v. Sanfоrd, 282 U. S. 359, 51 S. Ct. 150, 152, 75 L. Ed. 383.

“Taxation, as it many times has been said, ‍​​​‌​​​​‌​​​​‌​​‌‌‌‌​​‌​‌​‌​‌​‌​‌‌​‌‌​‌‌‌‌​‌​​‌​‍is eminently practical.” Tyler v. U. S., 281 U. S. 503, 50 S. Ct. 356, 359, 74 L. Ed. 991, 69 A. L. R. 758. Because of thesе considerations, it is necessary for a taxpayer to show the illegality of the exaсtions whieh he opposes. Reinecke v. Spalding, 280 U. S. 232, 50 S. Ct. 96, 74 L. Ed. 385. The burden in each ease to establish the faets whieh entitle it to the deduction or relief claimed is upon the taxpayer, аnd the real point in each case is whether that burden has been sustained by adequate evidence. Reinecke v. Spalding, supra.

Here the Commissioner, as a basis for his determination, found that the bonds, to the extent.whieh he required the collections for 1925 to be returned as inсome, had been ascertained by the taxpayer to be worthless in 1921, and a deduction on that ‍​​​‌​​​​‌​​​​‌​​‌‌‌‌​​‌​‌​‌​‌​‌​‌‌​‌‌​‌‌‌‌​‌​​‌​‍score claimed by the taxpayer had been allowed it. Before the Board, the taxpayer not only presented no evidence to the contrary, but by stipulation it agreed that the facts were just as the Commissioner first and the Board later, found theih.

The decision of the Board is affirmed.