DocketNumber: Docket No. 17764
Citation Numbers: 12 T.C. 907, 1949 U.S. Tax Ct. LEXIS 183
Judges: Fossan
Filed Date: 5/31/1949
Status: Precedential
Modified Date: 10/19/2024
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*908 The respondent determined a deficiency of $ 262.63 in the petitioner's income tax liability for the year 1943.
The major issue is whether the petitioner is entitled to a casualty loss under the provisions of
FINDINGS OF FACT.
The petitioner was a resident alien during the years 1942 and 1943. He is now an American citizen and resides in New York, New York. He filed his income tax return for the taxable*185 year with the collector of internal revenue for the second district of New York.
On May 10, 1940, the Kingdom of the Netherlands was occupied by German military authorities. On June 24, 1940, the Reich Commissioner for the occupied territory decreed, among other things, that the residents of the Netherlands might dispose of, encumber, or alienate domestic legal tender, negotiable instruments, securities, claims, or other domestic rights only under permit granted by the Foreign Exchange Control Institute. On August 8, 1941, the Reich Commissioner issued a decree requiring all persons who were Jews, or considered to be Jews, to deposit all cash, checks, and securities (with a specified exemption) with the banking firm of Lippmann, Rosenthal & Co. of Amsterdam, Holland, an agency of the German military government, hereinafter called Lippmann, and to transfer all credits and deposits with savings banks and other finance or credit institutions to Lippmann. The duty so to deposit and transfer applied also to the persons actually holding or possessing the assets. Penalties for intentional violation of the decree were imprisonment and fine. The assets might also be forfeited.
The petitioner*186 is a Jew. From 1912 to November 29, 1940, he was a partner in the banking firm of Pierson & Co., of Amsterdam, hereinafter called the firm. Prior to April 26, 1941, he was a subject of the Kingdom of the Netherlands and a resident of Holland. He was forced to withdraw from the firm on November 29, 1940, because he was a Jew, the Hitler regime making such action necessary. He left Holland on April 26, 1941.
At the time of his withdrawal from the firm, the petitioner transferred his capital in the firm to a so-called deposit or time account with it, to expire two years after the end of the war. In the meantime *909 petitioner had no right to use the account for his own purposes. He also had a "free" or ordinary account with the firm which was composed of some of the money received from it and of money theretofore deposited by petitioner. The firm received from the petitioner full power of attorney as to this account. Pursuant thereto the firm paid out of such account numerous items on petitioner's behalf from April 26, 1941, to May 29, 1942. The funds could be used and were used only in the occupied Netherlands.
At the time petitioner left Holland he was unable to transfer*187 or take with him the funds in the above accounts to the United States, as the export thereof was forbidden. The foreign exchange control was complete prior to the end of 1940.
The firm was obligated under the decree of August 8, 1941, to turn over immediately to Lippmann the funds in petitioner's ordinary account. However, it delayed doing so until it received threatening letters. It was forced on May 30, 1942, to transfer to Lippmann the credit balance in such account of 13,180.53 guilders.
The German authorities, after protest of Dutch bankers, agreed to respect time deposits for the time specified. However, they did not consider petitioner's deposit account a proper time deposit, since no specific time was designated and demanded transfer thereof to Lippmann. Interest was credited to the account as follows: 9,000 guilders (4 per cent) on June 30, 1942; 1,125 guilders (1 1/2 per cent) on October 31, 1942; and 3,750 guilders (2 per cent) on May 1, 1943. The German authorities considered the interest a free deposit subject to immediate transfer and on July 1, 1942, the firm was compelled to turn over to Lippmann the interest of 9,000 guilders. By delaying action and, later, *188 by stating to a German official in charge that it could not pay such large sums of money, the firm succeeded in delaying the transfer of the principal in the time account until on or about November 2, 1942, when it was forced to transfer to Lippmann one-half thereof, plus the interest of 1,125 guilders, or 226,125 guilders. On or about May 3, 1943, it was forced to transfer to Lippmann the balance of 209,078.06 guilders in petitioner's time account.
The three transfers, 13,180.53 guilders from the ordinary account and 226,125 guilders and 209,078.06 guilders from the time account, were made in actual funds, and receipts covering them were given to the firm. The petitioner has never recovered any part of such amounts so transferred to Lippmann, and claims loss deductions therefor in 1942 and 1943 when actual transfers thereof were made.
The petitioner duly filed a claim for refund on May 15, 1946, and an amended claim on April 29, 1947, alleging losses.
*910 In his notice of deficiency the Commissioner did not concede the petitioner's contention, based on the claims for refund, that he was entitled to deductions for losses in the years 1942 and 1943.
OPINION.
The question at*189 issue is, Did the Commissioner err in holding that the petitioner was not entitled to claim a casualty loss as the result of the seizure of certain Dutch guilder accounts in 1942 and 1943? The parties, by argument on brief, have reduced the problem involved to the question, Is
Only if the provisions of
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If, as a consequence, respondent's interpretation is correct the loss is nevertheless deductible under general principles of long standing. Petitioner was not required to assume the risk of successful termination of the war and the possible restoration of the confiscated property.
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In this case, however, the property was not destroyed or seized prior to December 11, 1941. It was not until May 30, 1942, that the German military authorities compelled the transfer to their depository of 13,180.53 guilders from petitioner's ordinary account. On or about November 2, 1942, and on or about May 3, 1943, the German military authorities confiscated 226,125 guilders and 209,078.06 guilders, respectively, thus completely closing out petitioner's deposit account.
What was said with respect to the meaning of the word "deemed" in
* * * There is also a difference of opinion as to the meaning of the word "deemed."
We may dispose at the outset of the meaning of "deemed." If it had been intended that this word should mean a rebuttable and not a conclusive presumption, the word "presumed" could readily have been used, and that is a word which is very familiar in many statutes. "Deemed," and its synonym, *194 "regarded," according to definitions in cases and dictionaries, is the equivalent of "considered" or "adjudged."
See also
The petitioner suggests it is seriously open to question whether a conclusive presumption that property was destroyed at a given time would be constitutional, citing
*913 It is argued by petitioner that the presumption of loss governs only if the taxpayer claims a loss under
The petitioner claims the deductions under
The petitioner is not entitled to the claimed loss deduction in 1942 and 1943 under
1.
(a) Cases in Which Loss Deemed Sustained, and Time Deemed Sustained. --
For the purposes of this chapter --
(1) Property not in enemy countries. -- Property destroyed or seized on or after December 7, 1941, in the course of military or naval operations by the United States or any other country engaged in the present war shall be deemed to have been destroyed or seized on a date chosen by the taxpayer in the manner provided in paragraph (4), which falls between -- (A) the latest date, as established to the satisfaction of the Commissioner, on which such property may be considered as not destroyed or seized, and (B) the earliest date, as established to the satisfaction of the Commissioner, on which such property may be considered as having already been destroyed or seized.
(2) Property in enemy countries. -- Property within any country at war with the United States, or within an area under the control of any such country on the date war with such country was declared by the United States, shall be deemed to have been destroyed or seized on the date war with such country was declared by the United States.↩
2.
In computing net income there shall be allowed as deductions:
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(e) Losses by Individuals. -- In the case of an individual, losses sustained during the taxable year and not compensated for by insurance or otherwise --
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(3) of property not connected with the trade or business, if the loss arises from fires, storms, shipwreck, or other casualty, or from theft. No loss shall be allowed as a deduction under this paragraph if at the time of the filing of the return such loss has been claimed as a deduction for estate tax purposes in the estate tax return.↩