Appeal of Calumet Steel Co.

OPINION.

Green:

The petitioner bases its claim to the right to deduct the amount of the Carbo Company account upon the provisions of section 5 of the Eevenue Act of 1917.

A. S. Hook, who signed all the returns referred to in the findings of fact, was the only witness for the taxpayer. He testified that the policy of the company in charging off accounts as worthless was ultra conservative and that at the time he directed the auditors to charge off the account of the Carbo Company he knew that that account was not worthless and that he expected to be able to collect a. part of the amount due. He stated that at the time the deduction was claimed by the petitioner on its return for 1916, he knew the account was not worthless. On the witness stand he testified that petition in bankruptcy of the Carbo Company was filed in February, 1917. This statement is not in accord with his sworn statement made in the return. He likewise stated on the stand that no effort was made through attorneys to collect this account prior to the time it was charged off in 1916. This statement is not in accord with the return. He likewise stated that the petitioner had never acquiesced in the Commissioner’s disallowance of the deduction here claimed. The petitioner’s letter of acquiescence executed by him, was offered and received in evidence.

We have repeatedly held that the burden is upon the petitioner to produce evidence before us sufficient to overcome the presumption that the Commissioner’s determination is correct. If any weight is to be given to this presumption, it is obvious that the testimony of the witness Hook is not sufficient to overcome it. His statements on the witness stand when this petitioner is seeking to deduct this account as a loss in 1917, do not at all coincide with the answers made in the return executed by him for the year 1916. The witness offered several explanations as to the reason for the conflict. One was that at the time the deduction was taken in 1916 he knew that the account was not worthless and that at that time he expected that the corporation would recover a part of the amount. This statement did not tend to increase our confidence in him. The respondent’s action in reducing invested capital by the amount of the bad debt is approved.

Reviewed by the Board.

Judgment will be entered for the Commissioner.