DocketNumber: Docket No. 2984
Citation Numbers: 5 B.T.A. 1171
Judges: Lansdon, Murdock, Only
Filed Date: 1/25/1927
Status: Precedential
Modified Date: 7/23/2022
The facts as to the first point in this proceeding are not in dispute. The petitioner paid the amounts of $12,535.96 and $9,859.39, respectively, in the years 1919 and 1920, to the Fidelity & Deposit Co. in discharge of its indemnifying bond to that concern on account of the Bergren and Sons contracts. In 1918, Bergren and Sons deeded to it property which had a fair market value of $7,300, which was to be applied on their obligation to the petitioner. The only issue here is whether such property was received, as suggested by the Commissioner, as security for the entire obligation of Bergren and Sons to the petitioner, or as a part payment of obligations known to be accrued at the time of transfer. The evidence convinces us that this payment was unconditional and that title passed as the result thereof. The petitioner concedes that its deduction from gross income for 1919 should be reduced by the amount of $7,300. On this point we are of the opinion that the petitioner is correct. It is entitled to deduct from its gross income in its income and profits-tax returns $12,535.96, less $7,300 for 1919, and $9,859.39 for 1920, as losses sustained during such years.
The evidence is conclusive that the petitioner expended the amount of $2,322.80 in 1919 in the construction of a building on land which it did not own, but which it occupied and used under an oral lease from month to month. This item was not included in any form in the petitioner’s income and profits-tax return for 1920, and so has not been allowed or disallowed by the Commissioner, either as an operating loss or as an ordinary business expense. The petitioner now pleads that,- as it had no lease on the land authorizing the use or occupancy thereof, the building, under the laws of California, became the property of the owner of the land, and its cost became a total loss to the petitioner at date of completion. It admits that it had some sort of oral lease or agreement with the owner of the land. In the absence of evidence, we are unable to determine the nature or terms of such agreement, or the rights of the petitioner thereunder, and we can not sustain its contention on this point.
Judgment will be entered on %0 days’ notice, under Rule 50.