Docket No. 6470. | B.T.A. | Aug 9, 1927
Lead Opinion
The decedent maintained personal books of account. Although he was an officer and a stockholder of the One Wheel Truck Co. and was familiar with its financial condition prior to his death, there is no evidence that he considered the notes which he held to be worthless. He did not charge them off on his books of account. Counsel for the estate contends “ that the fact that the notes of the One Wheel Truck Co. were not charged off on the taxpayer’s books is wholly immaterial as bearing upon the issue since said fact constitutes merely a bookkeeping entry or may be ascribed to faulty
Section 214- (a) (7) of the Revenue Act of 1918 provides that in computing net income there shall be allowed as deductions debts ascertained to be worthless and charged off within the taxable year. Under the provisions of the statute, it is necessary to an allowance of a deduction for bad debts that such debts shall have been ascertained to be worthless and charged off. In Ed. G. Lasater, 1 B. T. A. 956, the Board held that “ Under the provisions of the Revenue Act of 1918 a so-called bad debt is an allowable deduction from gross income only when ascertained to be worthless and charged off within the taxable period. The charging off of bad debts should, in the case of a taxpayer keeping regular books of account, be evidenced by such book entries as will effectually eliminate the amount of the bad debt from the book assets of the taxpayer.” See also Winthrop Ames, 1 B. T. A. 63; Greenville Textile Supply Co., 1 B. T. A. 152; Donalsonville Oil Mill, 1 B. T. A. 167; Murchison National Bank, 1 B. T. A. 617; Jessie B. Wadsworth, Executrix, 1 B. T. A. 1043; Dover Iron Co., 1 B. T. A. 1123; Mason Machine Works Co., 3 B. T. A. 745.
Judgment will be entered for the respondent.