Cantore v. Commissioner , 13 B.T.A. 60 ( 1928 )

MARIO CANTORE AND NELLIE CANTORE, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Cantore v. Commissioner

Docket Nos. 10480, 10481.

United States Board of Tax Appeals

13 B.T.A. 60; 1928 BTA LEXIS 3315;

July 26, 1928, Promulgated

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The petitioners having failed to prove that the sale of certain war bonds of the Italian Government was made in 1920, the respondent's determination that a loss in the sale thereof was not sustained in 1920 is sustained.

Joseph Getz, C.P.A., for the petitioners.

J. L. Greaney, Esq., for the respondent.

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ARUNDELL

These proceedings, which were consolidated for hearing and decision, were instituted for the redetermination of deficiencies in income tax for the year 1920 in the amount of $2,003.45 found against each petitioner. The only question involved is whether an alleged loss of $30,963.86 by the partnership, of which the petitioners were the sole members, in the sale of bonds of the Italian Government was sustained in the year 1920.

FINDINGS OF FACT.

The petitioners, residents of New York City, were the sole members of the partnership of M. & N. Cantore, engaged in the business of making dresses at 124-128 West 24th Street, New York City.

During the years 1918 and 1920, M. & N. Cantore invested the sum of $39.871.60 in war bonds of the Italian Government of the face amount of 450,000 lire. In August, 1920, after the partnership failed to locate a buyer here at an acceptable price, M. Cantore wrote his brother Alfonso Cantore, a practicing lawyer at Poggiomarino, Italy, requesting him to find a purchaser for the securities. On December 20, 1920, Alfonso Cantore answered the request by advising his brother in a letter written from Poggiomarino that he would get and give to Nellie Cantore, wife of Mario, the sum of $7,000 for the securities. This letter was received prior to December 31, 1920.

Before the close of 1920 Nellie Cantore caused an entry to be made on the partnership books showing a loss sustained on the sale of the bonds.

Nellie Cantore sailed for Italy in May, 1921, and upon her arrival delivered the bonds to her brother-in-law. He paid her part of the sales price at that time, and in accordance with her request, deferred paying the balance until a short time prior to her departure the latter part of 1921 for the United States. Upon the arrival of Mrs. Cantore in the United States in December, 1921, she delivered $3,500 of the money received for the securities to the partnership, she having spent the balance in Italy.

Upon an audit of the partnership return for the year 1920, the respondent disallowed as a deduction the sum of $30,963.86, claimed as a loss sustained on the sale of the bonds.

OPINION.

ARUNDELL: While there is evidence in the record indicating that some correspondence passed between the Cantore brothers after August and prior to December, 1920, there has been no proof of the receipt of definite advice of any kind from Alfonso Cantore on the sale of the bonds until the latter part of December, 1920, when M. Cantore received a letter, dated December 20, the pertinent part of which reads as follows:

I am satisfied that you wish to give me an opportunity to make a few cents by asking me to buy your Italian government bonds. These bonds have gone down in price in our town; just as your liberty bonds have; but in every other nation the same thing has happened. Paper has gone down and gold has gone up in value now. But we will overcome all difficulties and I am satisfied that you will take $7,000.00 in cash American money, which I will get and give to your wife Nellie.

It is not clear from the language used whether A. Cantore was making an offer of $7,000 for the bonds or was in a position to get that sum of money for the securities from other sources. The following excerpt from the testimony of M. Cantore would indicate that he considered the letter as meaning that his brother would be able to sell the bonds for him for the sum of $7,000:

I wrote a letter to my brother; he is a lawyer; I asked him if he can help me out, and my brother looked around and he said all right, he can do something, but he can do nothing more than getting any more than seven thousand dollars.

Whether or not the letter be construed as an offer on the part of A. Cantore to purchase the bonds for $7,000 in his own behalf or to secure a purchaser would seem immaterial, since there is no evidence of the acceptance of the offer, if one was made, in 1920, and there is no competent evidence in the record of a prior offer on the part of the partnership to sell the securities for the price of $7,000. The dealings had in 1920 did not extend beyond the stage of negotiations. The fact that petitioners entered on their books as a loss the difference between the purchase price of the bonds and $7,000 does not, of course, establish the deductibility of the loss in 1920 for bookkeeping entries are not conclusive evidence of the facts recorded and can not make sales from transactions which are not in fact sales. , and .

In view of our conclusion that no agreement was entered into in 1920 for the sale of the bonds, it is unnecessary for us to decide whether the loss sustained would be deductible if an enforceable contract to sell the securities had existed in 1920.

Judgment will be entered for the respondent.