Case Name: Citizens National Bank, Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1926-10-21
Citations: 5 B.T.A. 156
Docket Number: Docket No. 6148
Parties: Citizens National Bank, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: 
Reporter: Reports of the United States Board of Tax Appeals
Volume: 5
Pages: 156–158

Head Matter:
Citizens National Bank, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 6148.
Decided October 21, 1926.
W. 0. Rainey, G. P. A., for the petitioner.
W. Frank Gibbs, Esq., for the respondent.

Opinion:
OPINION.
Smith:
Section 234(a) (5) of the Revenue Act of 1921 permits a corporation to deduct from gross income in its tax return:
Debts ascertained to be worthless and charged off within the taxable year (or in the discretion of the Commissioner, a reasonable addition to a reserve for bad debts) ; and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt to be charged off in part.
It ivas very evident to the stockholders of the petitioner bank on February 28, 1921, that it would not be able to recover the full amount of its accounts receivable. The reason for winding up the affairs of the bank were that it was realized that losses must be sustained by it which would probably compel it to be dissolved. We are satisfied from the evidence adduced that the petitioner had ascertained that accounts receivable in an amount in excess of $18,183.18,— the net income determined by the Commissioner for the two-month period ended February 28, 1921, — were worthless and included in a reserve for bad debts.
Judgment will he entered for the petitioner.