Court Opinion

ID: 4626492
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:59:19.939568+00
Date Added: 2024-06-11T07:56:53.567377
License: Public Domain

MARGARET B. MCLAUGHLIN, EXECUTRIX, ESTATE OF E. E. BRUCE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.McLaughlin v. CommissionerDocket No. 31445.United States Board of Tax Appeals12 B.T.A. 19; 1928 BTA LEXIS 3620; May 18, 1928, Promulgated *3620  Decedent sustained a loss in 1922 through the liquidation of a corporation in which he was majority stockholder.  Held, that such loss may not be carried forward and deducted from income for the year 1923, under the provisions of section 204 of the Revenue Act of 1921, since it was not incurred in the conduct of a regular trade or business.  Charles F. McLaughlin, Esq., for the petitioner.  Benton Baker, Esq., for the respondent.  LANSDON *19  The respondent has asserted a deficiency in income tax for the year 1923 in the amount of $867.10.  The deficiency arises from the disallowance by the respondent of a deduction from gross income for 1923 on account of an alleged net loss sustained in 1922.  FINDINGS OF FACT.  The petitioner is the executrix of the estate of E. E. Bruce, who, prior to his death, resided in Omaha, Nebr.  During the taxable year, and for many years prior thereto, Bruce was majority stockholder, president and manager of E. E. Bruce & Co., a corporation engaged in the wholesale drug business.  In 1914 he purchased the controlling interest in W. G. Cleveland & Co., a corporation engaged in retailing drugs, hospital and*3621  surgical supplies to physicians, surgeons and hospitals.  The total sum paid for the stock was $61,800.  In order that E. E. Bruce & Co. might retail drugs and supplies to physicians, surgeons, and hospitals without incurring the enmity of retail dealers it was necessary to operate W. G. Cleveland & Co. It was also essential for Bruce to refrain from any ostensible connection with the latter concern.  He held no office in W. G. Cleveland & Co., although he was in fact its directing head.  W. G. Cleveland & Co. failed in 1922.  Bruce received nothing upon liquidation.  OPINION.  LANSDON: The petitioner contends that the loss sustained by deceased in 1922, through the failure of W. G. Cleveland & Co., was a "net loss," as defined in section 204(a) of the Revenue Act of 1921, and that such loss should be carried forward as a deduction from *20  income for the succeeding taxable year.  It is petitioner's contention that deceased was regularly engaged in the wholesale drug business within the meaning of the above section, inasmuch as he was president, manager, and majority stockholder of E. E. Bruce & Co.  We are unable to agree with petitioner's contention and approve the*3622  determination of the respondent on the authority of . See also ; ; ; ; . Judgment will be entered for the respondent.