Court Opinion

ID: 4595660
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:15:29.129004+00
Date Added: 2024-06-11T09:25:05.905752
License: Public Domain

FRANK L. ORTH, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Orth v. CommissionerDocket No. 5588.United States Board of Tax Appeals9 B.T.A. 249; 1927 BTA LEXIS 2637; November 22, 1927, Promulgated *2637 Frank L. Orth pro se.  James V. O'Callahan, Esq., for the respondent.  LOVE *249  LOVE: This proceeding is for the redetermination of a deficiency in income tax for the year 1924 in the amount of $158.24.  The only error assigned is that the Commissioner refused to allow as a deduction from gross income of the year 1924, $5,000 which *250  petitioner paid in a compromise settlement of a suit against him by George L. Danforth.  FINDINGS OF FACT.  The petitioner is an individual who resides in East Chicago, Ind.In 1912, the petitioner and George L. Danforth entered into a contract agreement by which petitioner authorized the said Danforth to act for him and in his behalf in the sale of a certain patent or rights under such patent.  Sometime subsequent to 1912, the controversy arose between the petitioner and Danforth, in regard to a claim, or claims by Danforth for commissions due him for services rendered.  In 1920, Danforth filed suit against the petitioner on said claims.  In 1924, a compromise agreement was made between them to the effect that petitioner should pay to Danforth $10,000 in full settlement of all claims against the petitioner. *2638  In pursuance of that agreement, petitioner paid to Danforth, on December 15, 1924, $5,000 in cash.  Petitioner keeps his books and makes his returns on a cash receipts and disbursement basis and on his return for 1924, deducted that $5,000 payment from his gross income.  The Commissioner disallowed the deduction and determined a deficiency.  Payment of the $5,000 was an ordinary and necessary expense, deductible in the year paid - 1924.  Judgment of no deficiency will be entered.Considered by TRUSSELL, SMITH, and LITTLETON.