Kirk v. Commissioner

*489 This proceeding is for the redetermination of a deficiency in income tax asserted by the respondent for the year 1924 in the amount of $1,480.34. The deficiency arises from the disallowance by the respondent of a deduction taken by the petitioner and claimed by him to represent a net loss sustained in 1923 in a trade or business regularly carried on.

FINDINGS OF FACT.

The petitioner is an individual residing at Bridgeport, Conn.

In the year 1918 the petitioner purchased shares of the capital stock of the Metal Ball Co. of Danbury, Conn., for $5,000. He subsequently invested $4,000 additional in the stock of that company. In 1921 he became convinced that the business would not prove profitable and he sold his stock in that year. Shortly thereafter the other stockholders of the company requested the petitioner to take charge of the company and endeavor to put it on a profitable basis, *2386 and the petitioner did so under an oral agreement with the other stockholders that as soon as he put the company on a paying basis they would reorganize it and give the petitioner a part of their stockholdings. From that time until some time in 1923 the petitioner devoted about two and one-half days per week to the Metal Ball Co., managing the buying and selling, acting as treasurer, redesigning and relocating machinery, and endeavoring to put the plant on a profitable basis. He severed his connection with the Metal Ball Co. in 1923, and on or about October 15 of that yhear he relinquished all claims against the company for "$1.00 and other valuable considerations."

*490 During the time the petitioner was connected with the Metal Ball Co. he was president and treasurer of the William P. Kirk Co., a corporation engaged in plumbing, heating and power work; president of the West Side Bank of Bridgeport; and a director of the Morris Plan Bank. He also owned and managed certain real estate.

The petitioner in his income-tax return for 1924 deducted an amount claimed by him to represent a net loss sustained in the year 1923. The respondent disallowed the deduction.

OPINION.

*2387 MARQUETTE: It appears from the record herein that the petitioner in computing his net income for 1924 deducted an amount that he claimed represented a net loss sustained in 1923. The amount of the alleged loss is not shown. The respondent disallowed the deduction, thereby placing upon the petitioner the burden of showing that a net loss was in fact sustained by him, and that it was in connection with a trade or business regularly carried on. The petitioner has introduced some evidence to show that in addition to his other activities in 1923 he was connected with the Metal Ball Co. under the circumstances we have set forth in the findings of fact. But he has entirely failed to show that he sustained any los in that enterprise or that he sustained a net loss in 1923. We may not speculate as to what happened or might have happened, or supply by inference the omissions or failures of proof, and on the record as it stands we can only affirm the determination of the respondent.

Judgment will be entered for the respondent.