Barneson

The Collector of Internal Revenue is appealing from a judgment .of the district court decreeing a refund to a taxpayer. The controversy arises out of the disallowance by the Commissioner of Internal Revenue of a $150,000 bad debt deduction taken by appellee on her 1941 individual federal income tax return.

The case comes to us upon stipulation of facts supplemented by the testimony of one witness for appellee and one, an Internal Revenue agent, for the Collector. The refund was decreed upon the finding that the questioned debt existed on January 1, 1941, and was then of value and that it became worthless during the ensuing year. Internal Revenue Code § 23(k) .(l).

The Collector thinks the alleged debt never existed but that if it ever existed the sum of the loss cannot be taken as a bad debt deduction because the taxpayer failed to take reasonable steps to collect it.

In order to rule with appellant Collector as to the non-existence of the debt, w& must determine that the court’s contrary finding was clearly erroneous. In determining this point we consider all of the evidence giving the written evidence the weight we deem it entitled to de novo and applying the oral evidence…