C. H. Wentworth v. Commissioner of Internal Revenue

Petitioner here seeks a review by this Court of a decision of the Tax Court of the United States determining a deficiency in income tax for the year ending December 31, 1947, in the amount of $60,902.38.

Petitioner in 1943 was the controlling stockholder in Flexo Manufacturing Company. An open account in taxpayer’s name was maintained on the books of the Corporation with the heading “Accounts Receivable — C. H. Went-worth.” On February 27, 1943, this account had a credit balance of $2,197.20. On that same date the taxpayer advanced $100,000 to the corporation and received a note in the face amount of $100,000, maturing in one year and bearing 6%' interest. On April 14, 1943, the open account had a credit balance of $3,-397.20, and on the same date the taxpayer advanced an additional $100,000, receiving an additional note also maturing in one year and bearing interest at 6%. Both notes were carried on the corporate books as “Notes payable.” On December 31, 1943, the open account on the corporation’s books in the taxpayer’s name reflected a debit balance of $197,211.03.

On October 31, 1944, the taxpayer’s open account had a debit balance of $200,742.60. The corporation on that…