Volume 6 — Tax Court Memorandum

[Deductions: Losses: Sale of worthless stock.] Petitioner is not entitled to a claimed capital loss in 1941 of $13,322.50 or for any lesser amount on account of an alleged sale for $5.00 of 400 shares of stock in the Independence Indemnity Company which he had acquired many years prior to the date of sale. The corporation had been declared insolvent in 1932 and all of its assets transferred in that year to another corporation which had agreed to reinsure its liabilities.

Petitioner is held not to have established a cost to its predecessor of good will which petitioner entered on its books at $65,000 and, having acquired its business from such predecessor in a nontaxable reorganization, is not entitled to include such amount in its equity invested capital for computation of its declared value excess-profits tax and excess profits tax.

Transferee liability: Valuation of transferred assets. - The Commissioner determined deficiencies against taxpayer on account of an unpaid tax liability of a corporation, in her capacities as (1) transferee of the corporation, (2) administratrix of her husband's estate (a transferee of the corporation), and as (3) transferee of a transferee (her husband's estate) of the corporation. Transferee status having been admitted, it was held that, since the liability of a transferee is the amount of the tax due and owing by the transferor to the extent of the value of the assets received, and the value of the assets received here exceeds the tax liability, the Commissioner's determinations are sustained.

Partnership. - Held, that for federal tax purposes there was no bona fide partnership between petitioner and his wife during 1940 and 1941.

Held, petitioner was a resident alien during the taxable year and correctly returned his income as such. Held: petitioner was a resident alien during the taxable year and correctly returned his income as such.

Petitioner cashed certain stolen bonds in 1934 and 1935 and omitted to report the proceeds as income in his returns for those years. Held: petitioner has not shown that statute of limitations on assessment had run or that respondent's determination was erroneous. Held, also, petitioner's returns were false and fraudulent with intent to evade tax.

During the period November 5, 1933 to April 14, 1934, petitioner, as a processor of hogs, paid a processing tax on the total amount of $406,418.02. Upon the evidence, held, petitioner bore the burden of such tax to the extent of $145,461.20, and is entitled to a refund of that amount.

Held, that petitioner was engaged in carrying on or doing business during 1940 and is subject to the declared value excess-profits tax under Section 600, I.R.C., as amended. Held: that petitioner was engaged in carrying on or doing business during 1940 and is subject to the declared value excess-profits tax under Section 600, I.R.C., as amended.

1. Petitioners' construction partnership kept its books on a completed contract accrual basis. Held: that under the method of accounting employed, an item of $5,200, the liability to which was not contested by the obligor, was properly accrued as income in 1935 and, accordingly, was not income taxable to the partnership in 1941.

Under testamentary trust, testator's widow was given four-fifths of trust income for life and trustee was authorized at its sole discretion to invade trust corpus if income proved not to be "sufficient and adequate for my wife." The remainder was given to a hospital. The widow had $12,500 in cash, her own household furniture and equipment and an automobile, a private income of $1,500, a suitable home, rent and tax free, and a prospective income of $4,500 from the trust, computed as of the date of testator's death. She was then 70 years of age. Held: The charitable bequest is deductible from the gross estate under Ithaca Trust Co. v. United States, 279 U.S. 151.

Gain or loss - Basis and rate of depreciation for certain improved real properties determined.

Value on November 2, 1942, of 400 shares of Smith, Kline & French Laboratories stock determined.

1. Amount of deduction for depreciation on automobiles used partly for business and partly for pleasure, determined. 2. Reasonableness of salaries of petitioner's officers determined. 3. Deductions allowed to petitioner for amounts paid by it to others for benefit of officers. 4. Petitioner, on an accrual basis, credited to its secretary the full amount of her salary for its fiscal year ending September 30, 1941, but paid to her only a part thereof, in cash and by liquidating her obligations. She included the full amount of such salary in her income tax return. Petitioner had almost enough cash available to pay the unpaid portion but could have borrowed ample funds to complete the payment at any time during its taxable year or two and one-half months thereafter. The officer had authority to sign checks of petitioner and could have paid herself her full compensation during the petitioner's taxable year. Held, the deduction of unpaid salary is allowable since the conditions imposed by section 24(c), Internal Revenue Code, have not been met. Ohio Battery & Ignition Co., 5 T.C. 283. 5. Failure to file an excess profits tax return for the fiscal year ending September 30, 1941 not due to willful neglect and penalty therefor disapproved.

On the facts held that during the taxable year the petitioner and his wife, with the intention to do so, were carrying on business in partnership to which the wife contributed capital and vital services equivalent to those contributed by the petitioner. Further held that such partnership was upon an equal basis and the petitioner is taxable upon only one-half of the profit realized.

Income. - Held, that two machines were the subject of bona fide gifts by petitioner and that the rentals and recapture payments thereon were not petitioner's income and, further, that… Held: that two machines were the subject of bona fide gifts by petitioner and that the rentals and recapture payments thereon were not petitioner's income and, further, that omission of such items from petitioner's returns for 1941 and 1942 was not due to fraud with intent to evade tax.

Held, that respondent erred in increasing the decedent's closing inventory when he made no corresponding adjustment of his opening inventory for 1939. Held: that respondent erred in increasing the decedent's closing inventory when he made no corresponding adjustment of his opening inventory for 1939.

In 1941 petitioner deducted a loss resulting from a transaction entered into for profit in 1937 with one, Robert J. Boltz. Held: the loss was reasonably certain and ascertainable in amount in 1940 and respondent's determination in disallowing the loss in 1941 is sustained, notwithstanding the recovery of a small part thereof in years subsequent to 1941.

Petitioner, a citizen of the United States, went to Edmonton, Province of Alberta, Canada, in November 1942 as an employee of Bechtel-Price-Callahan, a joint venture, building the Canol Pipe Line in… Held: that, during the year 1943, petitioner was not a bona fide resident of a foreign country within the meaning of section 116, Internal Revenue Code, as amended by section 148 (a) of the Revenue Act of 1942, and hence his salary is not exempt from taxation.

Compensation. - On the evidence, held, that a portion of extra compensation paid to petitioner's principal stockholders-directors-officers is deductible as reasonable compensation for extra services… Held: that a portion of extra compensation paid to petitioner's principal stockholders-directors-officers is deductible as reasonable compensation for extra services rendered, and held, further, that the remainder of such extra compensation is unreasonable and excessive.

Petitioner claimed for 1941 a war loss of certain personal property he left in his apartment when he left Paris, France, in June 1940. Held: petitioner has failed to establish the factual premise upon which must be based his right to a war loss deduction under section 127, I.R.C.Ernest Adler, 8 T.C. 726 (Mar. 31, 1947), followed.

Held, that petitioner has not proved that a debt owing to him became worthless during the taxable year.

For failure of proof, held: 1. Petitioner is not entitled to a loss deduction in 1941 under either section 127 (a) (2) or 23 (e) (3), I.R.C. Ernest Adler, 8 T.C. - (Mar. 31, 1947), followed. 2. Petitioner is not entitled to a dependent deduction on account of his mother who resided in Holland.

The taxpayer having failed to establish its statutory cost basis for two farms acquired by it in 1938, no loss deduction may be allowed in 1939 upon the sale of such farms.

Petitioner acquired common stock by gift and by purchase. Held: that the method followed by petitioner and the trustee was sufficient to identify the shares sold represented by the new certificates as sales of particular lots originally acquired at a particular cost, and the action of the Commissioner in applying the first in, first out rule is disapproved.

Transferee Liability. - Held, that respondent has failed to establish petitioner's liability, at law or in equity, as a transferee of the taxpayer. Held: that respondent has failed to establish petitioner's liability, at law or in equity, as a transferee of the taxpayer.

Held, the purchase and retirement by a corporation of all the shares of its stock held by one of its stockholders did not, under the circumstances here present, amount to the distribution of a… Held: the purchase and retirement by a corporation of all the shares of its stock held by one of its stockholders did not, under the circumstances here present, amount to the distribution of a taxable dividend to its remaining stockholders.

Held, in the taxable year petitioner and his wife were not engaged in carrying on business in a bona fide partnership which can be recognized for income tax purposes. Held: in the taxable year petitioner and his wife were not engaged in carrying on business in a bona fide partnership which can be recognized for income tax purposes.

Docket No. 5836 1. Petitioner, an individual, personally endorsed the notes of his company. The notes were in payment for certain machinery. Held: that petitioner has failed to establish the necessary elements to permit a deduction of the amounts so paid. 2. Petitioner was indebted to a bank on account of certain personal loans and on account of his having endorsed certain commercial paper discounted by the bank for the benefit of petitioner's companies.

In 1928 decedent transferred certain property in trust, the income from which was to be paid to him during his life and, upon his death, the principal of which was to be distributed to his daughter… Held: that the value of the trust corpus is not includible in the decedent's gross estate under the provisions of section 811 (c) of the Internal Revenue Code. Estate of Edward P. Hughes, 7 T.C. 1348 and other similar cases, followed.

1. Petitioner in the taxable year surrendered his stock in a corporation then liquidating and dissolving, receiving in exchange stock of another corporation to which the liquidating corporation had… Held: that he is entitled to deduction of this sum.

Reasonable compensation for services of petitioner's officers determined.

1. Petitioner, a corporation, was organized in 1923 by two individuals, each of whom, except for one qualified share, acquired 50 per… Held: petitioner is not entitled to deduct under section 23 (a) (1) (A) I.R.C., as reasonable compensation for services rendered by its two officers any amount in excess of the regular salaries paid each year in the total amount of $24,000 and proceeds from the scrap sales; held, further, the payments of the bonuses were in the nature of…

In 1931 Harry Horowitz, experienced in the needle trade industry, became an employee of Lee Sportswear Co., a partnership composed of Leon Fainblatt, Irving Fainblatt and Margaret Fainblatt. Held: that during the taxable years Harry Horowitz had a one-sixth partnership interest in Lee; Margaret Horowitz a one-sixth interest; and Leon and Irving Fainblatt each a one-third interest therein.

In computing decedent's net estate petitioners deducted the full amount of bequests to certain charities, the payment of which was subject to intervening life estates. Held: the amount deductible is the amount of the bequests reduced by an amount representing the delayed receipt, following Henry R. Ickelheimer, et al., Executors, 14 B.T.A. 1317.

Petitioner transferred to his son certain shares of stock in a transaction purporting to be a sale. Held: that the transaction was not bona fide and the dividends paid on the stock after the transfer are taxable income to petitioner.

Held, a debt owing to the petitioner did not become worthless in 1941. Held: a debt owing to the petitioner did not become worthless in 1941.

Petitioner acquired certain school district bonds by gift in 1927. Interest payments were first defaulted in 1930. The defaults were made good until 1935 after which no further payments were made. Held: the petitioner failed to prove that the bonds became worthless in 1941. Petitioner claimed her brother, his wife, and 12 nieces and nephews, who resided in Ireland, as dependents.

In 1937 petitioner purchased a tract of some 14 acres of land with certain improvements thereon. Petitioner's purpose in making the purchase was to resell the property in smaller parcels at a profit and, pending sale, to rent out the improvements to tenants. After purchasing the 14-acre tract petitioner had it subdivided into five separate parcels. He was unable to sell the property in separate parcels and in 1941 he sold the entire property in one transaction at a loss. Held, petitioner's loss was an ordinary loss and deductible in full after proper adjustments are made for depreciation "allowed or allowable" on the improvements.

Petitioner, a corporation, was organized in 1933 to take over the grocery business of three equal partners. Held: petitioner is entitled to deduct as reasonable compensation paid its two officers, in addition to the regular salary, a total of $8,000 of the bonuses paid for 1942 and a total of $16,000 of the bonuses paid for 1943.

On the record, held: .n1. Petitioner has failed to establish error in the basis used by respondent in determining depreciation on its patents. 2. The amounts deductible as ordinary and necessary business expenses determined.

Held, petitioner corporation realized no gain by the distribution in kind of certain of its assets in partial liquidation. Held: petitioner corporation realized no gain by the distribution in kind of certain of its assets in partial liquidation.

Petitioner owned 7,500 shares or 50 per cent of the stock of a corporation which cost him $50 per share about 1924. Held: the sales were bona fide and the realized losses deductible. Petitioners maintained agency accounts with a bank which held their securities, collected interest, dividends, rents, and commissions, deducted commissions for services and certain expenses and deposited the net proceeds to petitioners' bank account.

1. A debt owing to petitioner on note and open account from a trade customer which respondent disallowed as a deduction in 1943, the year in which petitioner… Held: petitioner is not entitled to a long-term capital loss deduction on account of the sale of the stock in 1941, where it failed to establish that the stock had not become worthless in a prior year. 3. Both petitioner and its subsidiary corporation kept books and filed income tax returns on an accrual basis.

Petitioner in the taxable years was a party to an agreement with two corporations for the exploitation and development of patent rights in a limited field through a system of licensing. Held: the organization was a joint venture or pool classifiable as a partnership under the Internal Revenue Code and not an association taxable as a corporation. Petitioner is taxable on his one-third distributive share of the income of the enterprise.

During the taxable year 1940 petitioner was the head of an organization or cult known as Mankind United. Held: the amounts retained by or paid to the bureau managers were in the nature of reasonable compensation to them for personal services actually rendered and were deductible under section 23 (a) (1), I.R.C. Held, further, the amounts paid for bookbinding, forms and literature and a part of the amounts paid for legal fees were also…

Invested Capital. - Held, that petitioner has not established that the good will or intangibles of the predecessor owner of its business had any fair market value at the time of petitioner's… Held: that petitioner has not established that the good will or intangibles of the predecessor owner of its business had any fair market value at the time of petitioner's acquisition thereof for stock in October 1917.

Petitioner, a personal holding corporation, in the taxable year 1939 distributed in kind to its two stockholders certain of its assets which had appreciated in value. Held: no taxable gain or income resulted from such distribution.

Petitioners' law firm, under one retainer to recover clients' war claims on basis of contingent fee for all services of 15 per cent of all recoveries, rendered… Held: that the services in the two periods are inseparable; also, that the fees received in 1941 were compensation for services rendered prior to 1932 as well as subsequent thereto and indivisible as between those two periods. Held, further, that petitioners are not entitled to the benefits of section 107, I.R.C.

In 1943, and for a good many years prior thereto, C. D. Gott operated a business under the name of C. D. Gott Company. Held: that inasmuch as the main part of the income of the business was from commissions on sales made by C. D. Gott as manufacturers' agent and capital was not an important income producing factor in the business and that in the taxable year David W. Gott rendered no substantial services to the business, no partnership between the two,…

Amounts of petitioner's gross income for each taxable year 1935 to 1942, inclusive, determined from the evidence. Held: that part of the deficiency for each taxable year 1937 to 1942, inclusive, is due to fraud with intent to evade the tax.

After World War I, taxpayer formed a business with his son and nephew. An enforcible partnership agreement was not made because taxpayer feared possible complications, but instead they were promised a specific salary plus a share of the profits to be fixed at the end of each year. This arrangement continued for more than twenty years and the success of the business was largely due to the special skills and hard work of the son and nephew. In 1942, however, a full-fledged partnership was formed with the son and nephew each getting one-fourth interest. For gift tax purposes taxpayer reported that he was making a gift of one-fourth the capital account to each of them. The Commissioner determined a higher valuation on the basis of other items on the books and a capitalization of the interests on the basis of earnings. Held, that the value of the gifts was as reported by taxpayer. The donees actually acquired little through the gift that they had not had before, and were now required to share liability for debts of the partnership.

Decedent, more than 10 years prior to the taxable year 1941, acquired a three-sixths interest in a California partnership. In 1941 he sold an undivided two-sixths interest at a net gain of $13,321. Held, a partner's interest in a partnership is a capital asset, the sale of which results in a capital gain or loss, taxable as provided in section 117, I.R.C.

Petitioner's claim to personal exemption as head of a family and to credit for two dependents disallowed for failure of proof.

1. Decedent died testate in 1941 at the age of 88. For more than 32 years prior to his death he had been making gifts to members of his family and close relatives. Held: the said gifts made on October 25, 1935, were not made in contemplation of death and should not therefore be included in the decedent's gross estate under section 811 (c) of the Internal Revenue Code. 2.

Trust, single or multiple: Income tax. - Held, that the trust instrument involved created a single trust for five beneficiaries and that respondent did not err in taxing the accumulated income of the… Held: that the trust instrument involved created a single trust for five beneficiaries and that respondent did not err in taxing the accumulated income of the trust accordingly.

Decedent was concerned about the economic condition of her son and daughter, and as they had borne the expenses of certain litigation involving her interest in the estate of her half brother,… Held: under all the facts and circumstances $ no part of the amounts transferred is includible in decedent's gross estate as transfers in contemplation of death.

Held, that certain bank stock which petitioners sold in the taxable year had not become worthless in a prior year and they are entitled to deduct their losses sustained upon the sales. Held: that certain bank stock which petitioners sold in the taxable year had not become worthless in a prior year and they are entitled to deduct their losses sustained upon the sales.

In the taxable year petitioner bank declared and distributed to its stockholders as a dividend in kind certain notes which it had charged off and deducted in its tax returns in previous years. Subsequently, the stockholders made collections on some of the notes. Held, the petitioner did not realize income either upon the distribution of the dividend in kind or upon the subsequent recoveries on the notes. First State Bank of Stratford, 8 T.C. 831, followed.

Held, during the taxable years in question petitioner's adult son was a bona fide partner in a partnership otherwise composed of petitioner and two adult children, where such son contributed services constituting a substantial factor in the production of income; held, further, the partnership is not recognized as to petitioner's wife, contributing neither capital nor services, and one adult daughter, who contributed no capital and performed only minor services, and petitioner is taxable on the respective shares of income credited to them.

On the record it is held that an inter vivos gift made by decedent of a substantial part of his estate to his wife 28 days before his death was made in contemplation of death within the purview of section 811 (c) of the Internal Revenue Code.

1. Held, certain gifts were not made in contemplation of death. 2. Deduction of executors' fees approved. 3. Held: certain gifts were not made in contemplation of death. 2. Deduction of executors' fees approved. 3. Reasonable amount for attorney's fees not yet paid by executors or allowed by the court, fixed and allowed.

1. The fair market value of petitioner's fig orchard as of 1935, and the life expectancy of the fig trees, determined for depreciation purposes. 2. Petitioner and his wife were married in 1936. Held: such agreement was legal and binding and should be applied in allocating income earned by their joint efforts from the operation of a fig orchard.

Income: Constructive receipt. - Held, that petitioner who reported on the cash basis constructively received taxable income for 1941 to the extent that certain credits made to his commission account… Held: that petitioner who reported on the cash basis constructively received taxable income for 1941 to the extent that certain credits made to his commission account on the books of his employer paid off his indebtedness to the company because of prior advances.

For several years prior to 1941 the two individual petitioners and their father (now deceased) were engaged in the furniture business in partnership. Held: she may not be recognized as their partner for income tax purposes in the taxable years 1941, 1942, and 1943.

Petitioner was the owner in 1943 of a well improved parcel of real estate in Cincinnati, Ohio which for a good many years she had used as a private residence. Early in 1942 she abandoned it as a private residence and placed it for sale or rent with her regular real estate broker who advertised it as such. The property was rented in September, 1942 for a period of one year with an option to the lessee to purchase for $35,000. The property had a fair market value of $35,000 on the date it was leased. In the fall of 1943 the petitioner refused to further renew the lease and after considerable negotiations with the lessee, sold it to the lessee for $25,000. Held, petitioner is entitled to take as a deduction, the loss which she incurred by reason of the sale, under the applicable statute and regulation. Edwin Vosburgh, 23 B.T.A. 780, followed.

Held, that certain obligations of the petitioner constituted preferred stock rather than indebtedness and that the amount accruing and paid on such obligations during the taxable year constituted the… Held: that certain obligations of the petitioner constituted preferred stock rather than indebtedness and that the amount accruing and paid on such obligations during the taxable year constituted the distribution of a dividend on preferred stock.

Held, on the facts that petitioners did not realize income in the taxable year in excess of the amounts reported on their tax returns.

The petitioner Alpha Agency, Inc. was engaged in the insurance underwriting business. The petitioner William Degen Weinberger was president of petitioner corporation and its sole stockholder. Petitioner Weinberger in the taxable years 1942 and 1943 incurred expenses, including expenses for entertainment, in connection with the business of the corporation. Weinberger drew sums from the corporation for these corporate expenses and for any other purpose that he needed money, including his own personal needs. In the taxable years 1942 and 1943, the corporation deducted the respective amounts of $19,879.30 and $20,621.32 as expenses of its "Loss Department" and "New and Old Business Department." Respondent determined that $7,500 in each of the respective years 1942 and 1943 was attributable to business expenses and in addition that the respective amounts of $7,500 and $8,500 for the years 1942 and 1943 were reasonable compensation for services rendered by Weinberger or total deductions allowed for 1942 and 1943 of $15,000 and $16,000. The balance of $4,879.30 and $4,621.32 respondent disallowed for lack of substantiation. Held, petitioner corporation should be allowed for the fiscal year 1942 a deduction of $12,626 for losses and expenses and $7,253 as compensation to Weinberger for his services in lieu of the amounts determined by the respondent and should be allowed for the fiscal year 1943 $12,448.92 for losses and expenses and $8,172.40 as compensation to Weinberger for his services. Held, further, these latter amounts should be taxed to Weinberger as compensation received instead of the $7,500 and $8,500 which the Commissioner has determined for the respective years 1942 and 1943.

Taxpayer, employed as special agent for the Federal Bureau of Investigation, had his official headquarters at Newark, New Jersey, from January 1 to April 15, 1943, and at New York City for the remainder of the year. The amount paid by him in 1943 for lodgings for which he received no reimbursement, held, not deductible as traveling expenses under section 23 (a)(1)(A), Internal Revenue Code.

Salaries of $4,550 paid by petitioner for 1942 to its president and its secretary-treasurer constituted reasonable compensation for services actually rendered by these officers in that year.

In 1937, decedent, Perry A. Yeast, purchased a cattle outfit which he sold in 1942 for $99,000. Held: Decedent's cost basis for the cattle outfit sold, capital expenditures and ordinary and necessary expenditures for the taxable period determined. 2. Imposition of 25 per cent penalty for failure to file return and five per cent negligence penalty for failure to keep proper records sustained.

Petitioner is a corporation owning and operating an old and established farm and garden seed business and in the fiscal years ending June 30, 1942 and 1943 had large volumes of sales and substantial… Held: the salaries paid by petitioner to each of these three executive officers in each of the taxable years were reasonable compensation for services actually performed for petitioner and the determination of the Commissioner is reversed.

Where two Ohio railroad corporations have been consolidated in reorganization and the laws of the state provide that upon the consolidation of railroad companies the debts, liabilities and duties of the respective companies shall attach to and be enforcible against the new or surviving company, and the order of the District Court for consummation of the reorganization provides that the new company shall assume all legal obligations of the trustees, including Federal taxes, a notice of deficiency addressed to the successor company is within section 52, I.R.C. The contract of lease provided that the net earnings, after the payment of all fixed charges and operating expenses, including taxes and expenses of administration, additions, betterments, etc., should be paid over to the lessor as rental, but if in any year the earnings were not sufficient to meet such expenses, then certain expenses, including taxes, were to be paid by the lessee, but any amount so paid by the lessee in excess of the earnings for such year shall be deemed advances by the lessee to the lessor. It is held that Federal income and excess profits taxes accrued for the respective taxable years are not additional rentals payable by the lessee to the lessor under the terms of the lease and the amounts of such accruals are not additional income to the lessor. United States v. Boston & Maine R.R., 279 U.S. 732, distinguished.

Petitioner and his wife carried on a retail jewelry business under a written partnership agreement. Held: that the petitioner and his wife were partners within the purview of the income tax statutes and that petitioner is taxable on only seventy-five per centum of the profits of the business.

1. Petitioner and his daughter were not engaged in the taxable years in carrying on a wholesale liquor business in partnership within the meaning of the Federal revenue laws. 2. The sale of petitioner's partnership interest to his partner in an automobile dealership was not completed until November 15, 1943, and petitioner is accordingly taxable on his distributive share of the partnership income for the period from January 1 to November 15.

Respondent determined a deficiency in petitioner's income tax for the fiscal year ended June 30, 1944 in the amount of $54,610.31. Held: that within the meaning of the Federal income tax statutes the claimed partnership did not exist during the period above named, and that the deficiency determined against petitioner should be sustained.

Petitioner in the taxable years 1942 and 1943 was engaged in the manufacture and sale at wholesale of brushes of various kinds and sizes. Held: the Commissioner erred in part in the deductions which he disallowed and reasonable compensation for each of these four officers to be allowed as deductions is found from the evidence.

1. Petitioner, employed by Douglas Aircraft Company, Inc. as a civilian worker at an Army base in Eritrea, East Africa, during 1943, held not to be a bona fide resident of a foreign country during that year within the provisions of section 116 (a) (1) of the Internal Revenue Code. 2.

Petitioner's cost basis determined for lands sold by it in 1941 to 1943, inclusive.

For lack of sufficient evidence, the respondent's determination of the amounts deductible for traveling, meals, lodging and other business expenses of the petitioner in the taxable year is approved.

Petitioner is not entitled to deductions under section 23(u), Internal Revenue Code, for payments made to his wife in 1942 and 1943 under a separation agreement which was not entered into incident to a judicial separation.

Petitioner is not entitled to deductions under section 23 (u), Internal Revenue Code, for payments made to his wife in 1942 and 1943 under a separation agreement but prior to any decree of divorce or of separate maintenance.

Petitioner, a nonprofit corporation organized pursuant to a trust created in 1939 by Levi M. Davenport, is not exempt from tax under section 101 (6) and (14) of the Internal Revenue Code.

On the evidence, held, petitioner and his wife were not engaged in business in the taxable year as a partnership recognizable for tax purposes and the profits of the business were taxable to… Held: petitioner and his wife were not engaged in business in the taxable year as a partnership recognizable for tax purposes and the profits of the business were taxable to petitioner.

A debt owing to petitioner is not proved to have become worthless in the taxable year.