Wadsworth v. Commissioner

*1043 Before JAMES, LITTLETON, SMITH, and TRUSSELL.

This is an appeal from a deficiency in the personal income tax of the decedent for the years 1919 to 1923, inclusive, in a net sum of $479.31, not all of which is in controversy.

FINDINGS OF FACT.

The decedent was engaged in business on his own account as a factor and salesman of wood pulp, paper, and paper products.

During the year 1919 the decedent, in connection with his business, expended for traveling and entertaining an amount not less than $1,025.

In the year 1923 the decedent, in connection with his business, visited Japan and was in Japan at the time of the earthquake, as a *1044 result of which be died November 2 of that year, immediately after his return home. He expended in connection with the said trip to Japan and for business purposes a sum of not less than $2,500.

The decedent, in connection with his business, sold merchandise to the Meteor Publishing Co., and in the year 1922 the account against the said company amounted to $1,560.64. The sum was deducted from the decedent's income-tax return*2696 for the said year 1922. It was charged off the books kept in connection with his business in 1923.

Nothing was ever collected upon the said account, and after the decedent's death it was definitely ascertained by the executrix to be worthless.

The executrix, in connection with the decedent's income-tax return for period prior to his death in the year 1923, deducted as a loss on account of a debt ascertained to be worthless the sum of $963.50 on account of merchandise sold to the Carthage Sulphite Pulp & Paper Co., and $300.04 on account of Novoye Ruskoye Slovo, a foreign-language newspaper in New York City. Both the said debts were ascertained to be worthless by the executrix, and to have been worthless at and prior to the date of the death of the decedent, and were charged off the books of the business prior to December 31, 1923.

The Commissioner, as to the year 1919, denied the taxpayer the deduction of $1,025 for expenses of entertaining, denied $1,500 on account of the trip to Japan of the sum of $2,500 claimed, and disallowed all of the foregoing bad debts, permitting, however, the bad account of the Meteor Publishing Co. to be charged off in the year 1923. The record*2697 does not disclose whether the two remaining accounts were permitted to be charged off in the period from November 3 to December 31, 1923.

DECISION.

The deficiency determined by the Commissioner is allowed in part and disallowed in part. Expenses of traveling and entertaiment for the year 1919 should be allowed in the amount of $1,025, and there should be allowed an additional sum of $1,500 on account of the decedent's trip to Japan in the year 1923.

The Commissioner's determination with respect to the account of the Meteor Publishing Co., whereby the charging off of the said account is disallowed for the year 1922 and allowed for the year 1923, is affirmed. The accounts of $963.50 of the Carthage Sulphite Pulp & Paper Co., and $300.04 of the Novoye Ruskoye Slovo, should be allowed as a deduction from income of the decedent for the period of 1923 prior to his death.

Final determination will be settled on fifteen days' notice, under Rule 50.