[Download] "Rosenthal v. Helvering" by United States Court of Appeals for the Second Circuit # Book PDF Kindle ePub Free
eBook details
- Title: Rosenthal v. Helvering
- Author : United States Court of Appeals for the Second Circuit
- Release Date : January 30, 1941
- Genre: Law,Books,Professional & Technical,
- Pages : * pages
- Size : 54 KB
Description
This case comes before us on a petition to review an order of the Board of Tax Appeals, assessing a deficiency in income tax for the year 1936 against the petitioners, who filed a joint return as husband and wife. The only question is whether the husband, whom we shall speak of as the taxpayer, was entitled under Γ§ 23(k) of the Revenue Act of 1936, 26 U.S.C.A. Int. Rev. Acts, page 828, to deduct a "bad debt" in the year in question. He was a physician, practicing in Monticello, New York, and had lent large sums to a hotel company upon its notes endorsed by two persons named Prisament, who were his wifes brothers and who owned all the companys shares. He had also guaranteed other notes of the company, endorsed by the Prisaments and held by a bank for which he had also given the bank security. The company became insolvent and the taxpayer received nothing by way of dividend; he was forced in addition to pay various amounts to the bank upon his guaranty, so that at the end of a number of transactions not necessary to detail, the Prisaments owed him over $61,000, on which their last payment was made on December 15, 1930. After the failure of their company in 1926, the Prisaments continued in the hotel business, being employed as hotel managers and the like; and as such they had earned $30,000 together with their keep up to the time of their last payment. They were also employed after 1930 at the Hotel Breslin in New York, one at a salary of $7,500 and the other at $3,000; but they saved nothing in those years and had no other property. One, Bambach, a vice-president of the Hotel Breslin, thought well of their abilities and favored them as lessees under a new lease of the hotel, which would have cost $25,000; but he died in December, 1935, and in 1936, fearing that the statute would bar the debt, the taxpayer asked them for new notes. They told him that they could pay nothing, that they would probably lose their jobs, and that they would sign no new notes, unless he gave them the money necessary for the new lease, which he refused to do.