East Hennepin State Bank v. Commissioner

APPEAL OF EAST HENNEPIN STATE BANK.

East Hennepin State Bank v. Commissioner

Docket No. 399.

United States Board of Tax Appeals

2 B.T.A. 24; 1925 BTA LEXIS 2580;

June 10, 1925, Decided Submitted May 18, 1925.

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R. T. Schneider, C.P.A., for the taxpayer.

W. Frank Gibbs, Esq., for the Commissioner.

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Before PHILLIPS.

Taxpayer appeals from the determination by the Commissioner of a deficiency in income tax for the year 1919 in the sum of $234.45, and alleges that the Commissioner committed error in refusing to allow the taxpayer to deduct, in computing its net income, the cost of certain Russian bonds claimed to have been ascertained to be worthless and charged off during the year 1919.

FINDINGS OF FACT.

The taxpayer is a Minnesota corporation doing a general banking business at Minneapolis. Prior to 1917 the taxpayer purchased 10 Russian 5 1/2 per cent bonds, due in 1926, of the par value of 1,000 rubles each, at a total cost of $3,064. In closing its books for the year 1919 it charged such bonds off on its books as worthless and claimed said sum of $3,064 as a deduction for bad debts in preparing its return for 1919. No interest had been paid on such bonds during 1918, 1919, or thereafter. At the close of the year 1919 these bonds were quoted among dealers at from $25 to $40 per 1,000-ruble bond.

DECISION.

The determination of the Commissioner is approved.