First State Bank v. United States

*335MEMORANDUM BY THE COURT

It appears from the agreed statement of facts that in the year 1919, the plaintiff held certain bonds in the amount of $6,000.00, which the commissioner admits to have then had no market value, and were in fact worthless as shown by the result of subsequent endeavors to realize something upon them.

The controversy in the case is as to whether plaintiff should have been allowed a deduction of $6,000.00 for bad debts on account of these bonds in its income-tax return for 1919. There is no dispute but that they were worthless. The principal contention on behalf of the defendant is that the stipulation does not show that they were worthless in 1919, or that they were charged off in that year. It must be admitted that the stipulation is rather indefinite; but the admission of the commissioner that they had no market value in 1919, taken together with the fact that efforts subsequently made to collect them proved unavailing, we think is sufficient to show that they were worthless in 1919. We think also that the action of the board of directors of the bank on October 3, 1919, directing in substance that the amount of the bonds be at once charged off, is of the same force and effect as an entry upon the books of the bank making the charge in the ordinary form.

There is no dispute as to plaintiff’s being entitled to a refund of $619.01 if the bonds are shown to be worthless and charged off in 1919. Our conclusion on these points requires that judgment be entered for the plaintiff for said amount^ and it is so ordered.