Court Opinion

ID: 4474434
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:10:55.924785+00
Date Added: 2024-06-11T15:04:21.240419
License: Public Domain

OpeeR, J., dissenting: Petitioner’s payment does not seem to me to be a deductible loss in 1942 in view of the possibility and indeed the probability of recoupment. For the payments he made he received a claim in the nature of subrogation to the rights of his partners in future earnings. At least that was the practical effect of the agreement. Until it was clear that this claim was worthless, I fail to see how a deductible loss was incurred; and, in fact, as of the end of the prior year it must have been evident that the firm’s earnings were likely to be large enough to make that claim entirely collectible. Without too much concern about a case where a long period of time might elapse, it seems to me that here the prospects for future collection were so good at the end of the very year when the payment was made that no deductible loss could have resulted.1 It is conceded that that year is still open in this proceeding. The consequence would be to eliminate the recoupment which was actually collected in the following year and which gives rise to the deficiency.   “* * * The statute was intended to apply not only to losses resulting from the physical destruction of articles of value but to those occurring in the operations of trade and business, where the business man has ventured on a course of action in the reasonable expectation that the promised conduct of another will come to pass * * * Only when events prove the prophesy to have been false can it be said that he has suffered * * * It may well be that he whose house has been burned has sustained a loss whether he knows it or not and may recover a tax paid in ignorance of that material fact. But we cannot say that the merchant whose action has been based not merely on ignorance of a fact but on faith in a prophesy — even though the prophesy is made without full knowledge of the facts — can claim to have sustained a loss before the future fails to justify his hopes.” Llewellyn v. Electric Reduction Co., 275 U. S. 243, 246-247.