Estate of Hutchings v. Commissioner ( 1942 )

Estate of George L. Hutchings, deceased, Theodore H. Smith and Henry T. Stetson, Executors and Trustees v. Commissioner.

Estate of Hutchings v. Commissioner

Docket No. 108416.

United States Tax Court

1942 Tax Ct. Memo LEXIS 49; 1 T.C.M. (CCH) 201; T.C.M. (RIA) 42634;

December 10, 1942

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Deficiency approved for failure of proof.

Henry T. Stetson, Esq., for the petitioners. Paul P. Lipton, Esq., for the respondent.

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VAN FOSSAN

Memorandum Opinion

VAN FOSSAN, J.: The respondent determined a deficiency of $630.89 in income tax for the year 1937. Among other adjustments, respondent disallowed a deduction of $4,500 claimed as a loss for worthlessness of stock of Delane Brown, Inc., holding that such stock did not become worthless in the taxable year. This is the only issue presented.

Petitioner relies chiefly on the fact that in the estate tax return for decedent, who died December 2, 1937, the stock of Delane Brown, Inc. which had an aggregate cost of $4,500 was returned as having no value. The return was accepted by respondent and a letter was addressed by him to the executors which disclosed no deficiency in tax.

Such proof does not satisfy the burden of proving that the stock became worthless in 1937. It does not, in fact, prove that the Commissioner necessarily accepted the valuation of the stock. Other adjustments may have been made to bring about the net result disclosed.

The burden was on the executors to establish that the stock became worthless during the taxable year. So far as the record before this Court goes, the stock may have become worthless prior to the taxable year. Such a fact would be entirely consistent with the estate tax return showing no value. Incidentally, the fact that a certain value was accepted for the stock in an estate tax proceeding is not conclusive in establishing the value of such stock. , affirmed .

On the record before us we have no alternative to holding that petitioners have not demonstrated that the stock became worthless in 1937.

Decision will be entered for the respondent.