Citizens National Bank v. Commissioner

*157OPINION.

Section 234(a) (5) of the Revenue Act of 1921 permits a corporation to deduct from gross income in its tax return:

Debts ascertained to be worthless and charged off within the taxable year (or in the discretion of the Commissioner, a reasonable addition to a reserve for bad debts) ; and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt to be charged off in part.

It ivas very evident to the stockholders of the petitioner bank on February 28, 1921, that it would not be able to recover the full amount of its accounts receivable. The reason for winding up the *158affairs of the bank were that it was realized that losses must be sustained by it which would probably compel it to be dissolved. We are satisfied from the evidence adduced that the petitioner had ascertained that accounts receivable in an amount in excess of $18,183.18,— the net income determined by the Commissioner for the two-month period ended February 28, 1921, — were worthless and included in a reserve for bad debts.

Judgment will he entered for the petitioner.