STATUTES CITED.
See ante, pp. xix, xx, xxi.
SUBMISSION OF ISSUES UNDER MANDATE.
See Taxes XLVIII.
SUPREME COURT DECISIONS.
See ante, pp. 759-774.
SURETY, PAYMENT BY.
See Contracts I.
I. Where a special type of transmission is primarily de-
signed and adapted for use in connection with an auto-
mobile engine, and was in fact used in some instances
as a part of an automobile or truck, it does not neces-
sarily follow that such transmission is an automobile
part or accessory, under the regulations of the Internal
Revenue Department, and in order to make the part
taxable it must, under the regulations, be designed for
the special purpose of being used as, or to replace, a
component part of an automobile. Universal Battery
Co. v. U. S., 281 U. S. 580, 583; Milwaukee Motor Prod-
ucts Co. v. U. S., 66 C. Cls. 295, 302. Ekstrom, 1.
II. Where written statements concerning items of claims
against an estate and concerning expenses of adminis-
tration have been filed within the required four-year
period after payment of tax, there was no fatal depar-
ture from requirement of the statute relating to claims
for refund and no material departure from require-
ments and procedure of the Bureau's rules and regula-
tions, although such claims were not filed upon printed
Treasury Form 843. Hoyt, 19.
III. Where decedent's estate in 1921 paid note at bank, on
which decedent was accommodation endorser, and es-
tate received stock certificates which had been pledged
as collateral by maker of note, it was properly con-
strued by Commissioner of Internal Revenue that
the stock so received by the estate repaid the estate for
the amount paid out, and is not to be allowed as a
deduction in the determination of the estate tax; but
the loss, if any, sustained by the estate on the stock
so acquired, is a deduction properly to be allowed from
income in the year in which the loss is sustained. Id.
IV. Where plaintiff in 1923 received 2,500 shares of stock as
additional compensation and did not report same in his
income tax return for that year, on the basis that it was
a not closed transaction, he is estopped from claiming
refund on his income tax for 1928 and 1929 based on
difference between selling price of shares sold in these
years and alleged valuation in 1923. See Mahoning
Investment Company v. United States, 78 C. Cls. 231,
248; Rothschild v. Title Guarantee & Trust Co., 204
N. Y. 458; R. H. Stearns Co. v. United States, 291 U. S.
54 cited. Robbins, 39.
V. Where railroad received in 1919 award of additional rail-
way mail pay for carrying the mails in 1916 and 1917,
for which payment was made in 1920, this addition to
income is held to be properly assessable in year in which
amount due the plaintiff was definitely settled, and
time when notice of decision was served upon taxpayer
is immaterial. New York Central Railroad Co. v. Com-
missioner of Internal Revenue, 79 Fed. (2d) 247. (Cer-
tiorari denied.) Los Angeles & Salt Lake, 87.
VI. Where books are kept on accrual basis, return should be
made for the year in which income is definitely de-
termined; the Commissioner, however, having discre-
tion to determine the method of accounting which
most clearly reflects the net income. Lucas v. Amer-
ican Code Co., 280 U. S. 445, 449. Id.
VII. Where there is an exchange of properties, with no increase
in income and no increase in value of assets, there is no
taxable gain. Id.
VIII. Where corporation failed to make income tax return and
a return was subsequently made up by field agent,
it was improper to include as gross income contract
value of work performed instead of amount of cash
actually received on contract; deductions taken in re-
turn prepared by field agent, after investigation, pre-
sumed to be correct. McNeill-Allman, 109.
IX. Where file relating to claims for refund of taxes for years
1920, 1921, and 1922 were considered by Special Ad-
visory Committee in connection with case referred to
the Committee by the Commissioner, involving claim
for refund of taxes paid for 1923, this does not consti-
tute reopening and reconsideration of the claims for
refund for 1920, 1921, and 1922, without special author-
ity. Connor v. United States, 82 C. Cls. 476; Savannah
Banking & Trust Company v. United States, 75 C. Cls.
245. Boyce, 114.
X. Letter from Chairman of Special Advisory Committee
was sufficient notice of rejection. William E. Jones v.
U. S., 78 Cls. 549; J. E. Ervine & Co. v. U. S., 81 C. Cls.
534.
XI. Where a net gain or loss results from amounts distributed
in liquidation of a corporation, under Section 115 of
the Revenue Act of 1928, it has the same effect as a
sale or exchange of capital assets and is to be treated
as a capital gain or loss, under Section 101 of the Act.
H. T. White, 125.
XII. Where Chicago brewery held saloon licenses which it had
purchased prior to Prohibition Act of 1919, and 18th
Amendment, and which became worthless by reason
of these enactments, deduction of loss so sustained is
allowable. Gambrinus Brewery Co. v. Anderson, 282
U. S. 638; William Zakon v. Commissioner, 7 B. T. A.
687; McAvoy v. Commissioner, 10 B. T. A. 1017 cited.
Clarke v. Haberle Crystal Springs Brewing Co., 280
U. S. 384 and Renziehausen v. Lucas, 280 U. S. 387,
distinguished. Elston, 136.
XIII. A referee in bankruptcy, not being a judge of a "constitu-
tional court," his compensation, which is indefinite, is
subject to income tax. Williams v. U. S., 289 U. S.
553; O'Donoghue v. U. S., 289 U. S. 516. Evans v. Gore,
253 U. S. 245, distinguished. Charles, 168.
XIV. The rule in most jurisdictions, including the Federal
courts, is that, in the absence of an agreement or con-
sent to receive it as such, a promissory note of the
debtor, although accepted by the creditor, does not in
itself constitute payment or amount to a discharge of
the debt. Mellinger, 272.
XV. The taking from debtors of separate new notes including
past due interest, for which new or additional security
is taken, does not constitute the receipt of taxable in-
come by a taxpayer keeping her books on a cash
basis. Id.
XVI. The taking of security for a preexisting debt does not con-
stitute payment or discharge of the debt, and it follows
that the taking of additional security does not consti-
tute payment of the debt. Id.
XVII. Where rebates received in connection with contract for
purchase of material were credited to the personal ac-
count of president of the corporation, who was owner
of all of the capital stock of the corporation, said presi-
Ident is held to be liable for tax on such amounts as
income. Thomas, 388.
XVIII. Where rebate checks were payable to corporation but
were credited on corporation's books to the account of
the president, they were not taxable to the corporation
but to the president. Id.
XIX. Under the Revenue Act of 1918, providing for deduction
from gross income of "debts ascertained to be worth-
less and charged off within the taxable year," the two
conditions which must be fulfilled are (1) ascertain-
ment of worthlessness and (2) charging off of the
debts. Ruppert, 396.
XX. Upon proper showing, a loss may be allowed even where
there has not been a foreclosure, provided, however,
there is a reasonable determination of worthlessness,
and it must appear that a bona fide examination has
been made of a debtor's solvency or value of securities
pledged to secure the debt. U. S. v. White Dental Mfg.
Co., 274 U. S. 398. Id.
XXI. A corporate taxpayer was not entitled to a deduction
from gross income for "bad debts" in amount of debts
charged off by it within the taxable year, where sub-
stantial collections were made on debts in subsequent
years, in absence of any showing that taxpayer, before
charging off debts, carefully examined accounts of
debtors to ascertain debtor's solvency and collectibility
of debts from sale of securities.
XXII. Where a taxpayer had failed to establish that it had made
a reasonable ascertainment that debts charged off by it
during the taxable year were then worthless, it was not
entitled to the entire deduction claimed on the ground
that amounts charged off were deductible from gross
income as bad debts, or to a partial allowance based
on partial collections of those debts in subsequent
years.
XXIII. Where income tax return was filed in name of partner-
ship, and refund claim was filed on behalf of the
partnership, and in claim in abatement it was asserted
that there was no partnership, contention is not sus-
tained by the evidence, and tax is held to have been
properly assessed. Moyle, 446.
XXIV. A presumption existed that the assessment of additional
taxes by Commissioner was correct. Id.
XXV. The statute prohibiting refund of taxes paid under certain
circumstances after running of statute of limitations
was applicable to taxpayer's suit to recover taxes paid,
in view of findings with reference to plea in abatement
and payment of taxes. Graham & Foster v. Goodcell,
Id.
XXVI. Where on March 24, 1923, Commissioner made a jeopardy
assessment against taxpayer for calendar year 1917;
taxpayer filed claim for abatement of the jeopardy
assessment; the claim in abatement caused a delay in
collecting tax of over two years, and on December 4,
1925, abatement was rejected in part and certificate of
overassessment issued and sum remaining unabated
was paid and claim for refund was filed on January 30,
1930 in these circumstances the taxpayer could re-
ceive no benefit from statute of limitations. Vanderlip
v. United States, 79 C. Cls. 489. Id.
XXVII. Whether a deficiency assessment of income and profits
taxes was made and collected within the time per-
mitted by statute or not, where a claim for refund was
not filed within four years after payment of any part
of the taxes, the taxpayer was not entitled to the
refund and the claim was properly disallowed. Balti-
more County Bank, 539.
XXVIII. Finding of Commissioner of the Court affirmed that
taxpayer properly ascertained in 1929 that loans made
in 1927 and 1928 were worthless, and held to entitle
executors of taxpayer's estate to recover overpay-
ment, with interest, resulting from refusal of Internal
Revenue Commissioner to allow bad debt deduction
for 1929. City Bank et al., 544.
XXIX. Where taxpayer, who did not keep books of account,
informed agent who was preparing 1929 income tax
return that certain loans were a total loss and that
taxpayer wanted them deducted on the return, but
agent failed to claim the deduction, contrary to tax-
payer's instructions, the executors of the taxpayer's es-
tate were entitled to make claim for refund, since fail-
ure to include the deduction in the return was fully
explained. Peters v. U. S., 80 C. Cls. 830. Id.
XXX. Where the social features of a club were quite attrac-
tive, and not merely incidental, but constituted an
essential factor of the organization, it is held that the
club is a "social club" within the meaning of the
statute taxing dues and initiation fees of such clubs,
even if its predominant purpose is the serving of
luncheons to its members. Detroit Club, 549.
XXXI. Preponderance of evidence held to show that claim for
refund, alleged to have been filed, was never filed.
Worden & Co., 556.
XXXII. Under the Texas constitution and statutes, in effect at
the time, it is held that income of the husband in
1928 derived from property acquired by him after
marriage by gift, devise, or descent was at that time
his separate property and taxable to him alone.
Hurd, 595.
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