Evening bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1895-1912, 1904-03-24

Sullivan, L. r. 6 App. Gas. 373; Reds
Brewery Co. VS.. Male, (1S91) 2 A. c. /.
As to whether particular losses have
occurred in a particular year or in some
other year II is sometimes difficult to
say. More or less latitude should be
allowed as to when debts. for instance,
have become worthless. Probably a
worthless debt could not be held to be
written Off in whole or in part in seb-
sequent years for the purpose OF evad-
ing the income tax law.
In the cases Of the First American
Savings & Trust Co. and the First Ma
tional Bank the losses were of S13,-
9S1.47 and $19,275.OO respectively on a
note Of NJ. w. McChesney & Sons. This
was a demand note given in 1900. It
was for $4,000, divided into $40 1000
and $4,000 between the two appellants
in respect Of ownership. The loan was
made by them In the usual course of
banking business. Interest was paid up
to January 81, 1902. In July, 1902, de-
fault was made in the payment Of in
terest. The balance of the note, after
crediting the amount realized on the
collateral securities, which 1t seems the
holders Of the notes bid In and which,
according to the testimony, were alb
solutely worthless, was written off as
Il total loss-all except $4,000 which
was retained on the books to be writ
ten off the following year because the
appellants did not wish to write of all
In one year. The testimony is that the
hole of the debt is bad-apparently
because Of the failure OF the Kona
Sugar Co., certain bonds and stock in
which were the principal securities to
the note. and Of NJ. W. McChesney g.
Sons, the agent Of the sugar company
and makers Of the note. Such losses
as these, not Of capital permanently
invested. but Of loans made in the usual
course Of banking business, would seem
TO he deductible. provided they &C.
Cured during the year in question,
July 1. 1902-June 80, 1903, even under
narrower statutes than ours. See Law.
less VS.. Sullivan and Reds Brewery
Co. VS.. Male. supra. In our opinion,
they are deductable under our statute.
They must, we think, be taken to have
become losses during the year In Ques
ton. There was no default In the pay
ment Of interest until month after
that year began. The testimony seems
to indicate that the balance Of the note
was considered total loss during that
year and that must be taken to have
been the finding of the Tax Appeal
Court. There is no evidence that 1t
was a loss before that year began, al
though the amount that might be real-
lied on 1t was uncertain.
The principal item in the case of G.
Brewer L. Co., Ltd, is similar to the
items already considered. 1t was a
note of the Kona Sugar Co., Endorsed
by NJ. w. McChesney 4 Sons, given In
the Coure of business for railway ma
terial sold. 1t was dated February ),
1901, when NJ. w. McChesney e. Sons
credit was good. II was for $4,000. As.
the balance unpaid, now in question.
Icing S3,Si3.SS. The Kona Sugar Co
failed and its property was sold at
receivers sale in the early part of 100?
for not sufficient to pay its secured
creditors. NJ. W. McChesney 4 Sons
also failed in consequence. There was
some stock, as collateral to the note,
In the Hawaiian Navigation Co., Ltd,
which failed before the Kona Sugar
Co. The debt was then written of.
The debt shows that IL was regarded