Court Opinion

ID: 4490955
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:02:37.40294+00
Date Added: 2024-06-11T15:03:23.503432
License: Public Domain

This is an appeal from the determination of a deficiency in income ,-and profits tax for the calendar year 1920 in the amount of $399.25, ■arising from the disallowance of a deduction of $4,892.20 as debts .alleged to have been worthless and charged off within the year.
FINDINGS OE PACT.
‘The taxpayer is a national banking association with its principal -office at Hailey, Idaho.
On December 23, 1919, the taxpayer loaned to one S. T. Knifong ••$5,900, taking his note due June 23, 1920, secured by a chattel mortgage on certain cattle. The taxpayer, believing from information in its possession that Knifong was insolvent and that it would be ;unable to make collection of the full amount of the note, together with certain other amounts owing to it by him, charged off on April 29, 1920, $1,000 of said note of $5,900. On July 10, 1920, the taxpayer foreclosed the chattel mortgage and recovered the sum of $722.63, which was applied as a credit upon the note. On November 28, 1919, Knifong gave taxpayer a certain real estate contract as ■security for the balance due on his note of $4,177.37. On December 81, 1920, taxpayer estimated that it could not recover more than $2,300 on said real estate contract and charged off the difference, amounting to $1,877.37.
In addition to the note for $5,900, S. T. Knifong was indebted to taxpayer in the amount of $1,093.88, which was made up of $912.42 overdraft and $181.46 interest past due. This amount was charged off by the taxpayer as worthless on April 29, 1920.
Prior to July 1, 1920, taxpayer had loaned to the Salmon River Live Stock Co. the sum of $3,500, taking its note due July 1, 1920. On November 10, 1920, the Salmon River Live Stock Co. paid the sum of $1,015.56 upon said note. On December 31, 1920, the taxpayer, believing that it would be able to collect only $1,563.49 of the remaining balance of $1,984.44, charged off $420.95. The balance of $1,563.49 was subsequently paid by the debtor.
DECISION.
The determination of the Commissioner is approved.