Patten & Davies Lumber Co. v. Commissioner

The petitioner sought a deduction from its income for the year 1921, for purposes of taxation, of the amount of a bad debt owing to it by the Sunset Pier Company. The Commissioner decided against the petitioner, and his decision was affirmed upon appeal to the Board of Tax .Appeals. The petitioner seeks a review of the decision of the Board of Tax Appeals. The sole question presented is as to whether or not the debt in question was ascertained to be worthless at the time it was written off the books of the petitioner, in December, 1921. There is no dispute in the evidence as to the facts. It appears from the evidence that in the year 1921 the petitioner furnished lumber valued at $15,000 to the Sunset Pier Company, to be used in the construction of a wharf or pier at Venice, Cal., and as security therefor received a deed of trust on a leasehold interest upon this wharf or pier. Later during the year a building constructed upon the pier (referred to in the evidence as a “pleasure pier”) was burned, the pier was partly destroyed and the activities from which the debtor anticipated its revenue were so far circumscribed that on December 9, 1921, a petition in involuntary bankruptcy…