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eBook details

• Title: Pender v. Commissioner of Internal Revenue.
• Author : United States Court of Appeals for the Fourth Circuit
• Release Date : January 11, 1940
• Genre: Law,Books,Professional & Technical,
• Pages : * pages
• Size : 63 KB

Description

This is a petition to review a decision of the board of Tax Appeals holding deduction of loss sustained in the sale of real estate to be subject to the limitation of $2,000.00 prescribed by Sec. 117(d) of the Revenue Act of 1934, 48 Stat. 680, 26 U.S.C.A. Inc. Rev. Acts. Petitioners are David Pender and wife of Norfolk, Va., who filed a joint income tax return for the year 1935. In 1928, in a transaction entered into for profit, they acquired title to real property located on Boush Street in Norfolk and assumed indebtedness against it secured by deed of trust. On December 5, 1935, after certain capital improvements had been made on the property, its depreciated cost to petitioners was $159,419.21, and the amount of the notes outstanding secured by the deed of trust was $41,224.05. On that date, petitioners conveyed this property, together with another piece of real estate worth $10,000, to the holders of the notes in satisfaction of the indebtedness evidenced thereby.The loss to petitioners on the two pieces of property so conveyed was $129,041.78; and they sought a deduction from income on account thereof in the sum of $51,216.30, which resulted in a showing of no tax liability on their return. The Commissioner disallowed the deduction, however, except to the extent of $2,000, and the Board of Tax Appeals affirmed his action thereon. The facts surrounding the conveyance of the property were thus found by the Board: "On December 5, 1935, the notes secured by the Boush Street property were past due both as to principal and interest in the total amount of $41,224.05. Prior to this date the mortgagees had made presistent demands that the debt be paid and threatened foreclosure if payment was not forthcoming. Petitioner was unable to pay the debt in cash and offered to convey his rights in the property in satisfaction of the debt. The mortgagees refused this offer and demanded a statement showing petitioners financial condition. This statement showed that petitioner owned the National Lane property above described which was unencumbered and at that time had a market value of $10,000. To prevent foreclosure petitioner conveyed to the mortgagees his title to the Boush Street property and in addition conveyed to them the National Lane property in consideration of his release from all liability with respect to the mortgage indebtedness."

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