Court Opinion

ID: 4598021
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:20:24.622648+00
Date Added: 2024-06-11T07:59:23.517316
License: Public Domain

APPEAL OF THE NATIONAL BANK OF BALTIMORE.National Bank of Baltimore v. CommissionerDocket No. 3844.United States Board of Tax Appeals3 B.T.A. 1038; 1926 BTA LEXIS 2497; March 30, 1926, Decided Submitted July 9, 1925.  *2497 H. C. Poffenberger, Esq., for the taxpayer.  R. P. Smith, Esq., for the Commissioner.  *1038  Before STERNHAGEN and LOVE.  The Commissioner determined a deficiency of $949.61 income and profits tax for 1919 by including in gross income an amount of $6,195 received by the petitioner as the last payment on account of the principal of a loan existing in 1911, and an amount of $11,413.18 received in that year as accumulated interest on the original loan.  FINDINGS OF FACT.  On September 1, 1911, the petitioner had loaned to a partnership the sum of $105,000 on demand negotiable notes secured by negotiable bills of lading and warehouse receipts.  Some of the bills of lading and warehouse receipts were forgeries.  Some payments were made, or in some other way the account was reduced to a balance outstanding on November 3, 1911, of $71,317.78.  On November 3, 1911, a national bank examiner was examining the petitioner's books, and he suggested that the petitioner immediately charge off $70,000 of *1039  the account, which the board of directors thereupon authorized on November 4, 1911.  Of this $70,000 charged off, payments amounting to $13,805 were received*2498  up to June 30, 1913.  Later one of the partners wanted to borrow $10,000 from the petitioner, which the petitioner would only lend with a satisfactory assurance of repayment of the $70,000.  One of the partners wrote the petitioner a letter in which he said he reacknowledged the debt and intended to pay it.  He gave notes for the amount, signed by him and his brother, and payments were made of $20,000 in 1917, $30,000 in 1918, and $6,195 in 1919.  In 1919 interest on the account was received of $11,413.18.  The deficiency should be computed by excluding $6,195 from petitioner's income for 1919.  Judgment accordingly will be settled on 15 days' notice, under Rule 50.