Lepman v. Commissioner , 15 B.T.A. 767 ( 1929 )

HORACE I. LEPMAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

JESSE M. LEPMAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Lepman v. Commissioner

Docket Nos. 28581, 28582.

United States Board of Tax Appeals

15 B.T.A. 767; 1929 BTA LEXIS 2794;

March 11, 1929, Promulgated

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Jesse I. Miller, Esq., for the petitioners.

E. W. Shinn, Esq., and E. M. Niess, Esq., for the respondent.

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VAN FOSSAN

In these proceedings, which were consolidated for hearing and decision, petitioners seek redetermination of deficiencies in income taxes for the calendar years 1923 and 1924, as to which years respondent determined in Docket No. 28581 deficiencies of $717.24 and $702.95, respectively, and in Docket No. 28582 deficiencies in the amounts of $108.94 and $723.74, respectively. The sole question arises from the refusal of respondent to permit petitioners to deduct in the taxable years the unabsorbed portion of losses suffered in the year 1922.

FINDINGS OF FACT.

Petitioners during the year 1922 were stockholders and officers in an Illinois corporation located in Chicago, known as Lepman & Co., each owning 297 2/3 shares of stock of a total of 1,000 shares outstanding. Lepman & Co. was a family corporation, the remainder of the stock being owned by other members of the same family. Petitioners devoted their entire time to the affairs of the corporation's business of buying and selling butter, eggs and poultry, and each received a salary for 1922 of $7,500.

In 1922 the corporation became bankrupt and the stock held by petitioners became worthless in the said year, entailing a loss to each petitioner of $29,766.62. Petitioners claimed and were allowed deductions on account of said loss on the stock in tax returns for 1922. In the taxable years 1923 and 1924 petitioners sought to take advantage of the provisions of section 204 of the Revenue Act of 1921 and deduct the unabsorbed portion of the losses as net losses. Respondent disallowed the deductions.

OPINION.

VAN FOSSAN: The action of the respondent is approved. ; ; . The loss sustained by petitioners was not such a loss as is permitted to be deducted in subsequent years.

Judgment will be entered for the respondent.