*2716 Release of indebtedness under the facts held not a deductible loss.
*996 Before JAMES, STERNHAGEN, and TRAMMELL.
This appeal involves a deficiency in income taxes in the amount of $5,108.04 for the year 1919, and is based upon the disallowance by the Commissioner of an alleged loss of $12,000 by reason of the release of a debt owing by a corporation to the taxpayer.
The Commissioner moved that the appeal be dismissed on account of lack of evidence. The taxpayer introduced no evidence but relied $997 *997 on the allegations of the petition which were admitted in the answer of the Commissioner, from which the Board makes the following
FINDINGS OF FACT.
The taxpayer was a citizen of Newark, N.J. He died on November 23, 1924. He owned one-half of the outstanding capital stock of the Mercantile Realty & Improvement Co., a New Jersey corporation, with outstanding capital stock of $225,000 par value, and during the years 1914 to 1918, inclusive, advanced to that corporation the aggregate amount of $12,000 to make up half of the operating deficit, *2717 from the obligation of repaying which he released the corporation in January, 1919.
The following resolution was adopted by the board of directors of the said corporation on January 28, 1919, with respect to the release of the claim of $12,000 by the taxpayer:
Matter of securing release from Jos. M. Byrne and Arthur G. Hensler in the sum of $12,000 each, was discussed. The Secretary-Treasurer stated that the books showed the Company indebted to each of them for the above amount, same being total of various sums paid by them in cash during the years 1914 to 1918, inclusive, to make up loss in renning building 776 Broad St., owned by this Company, in which they are the principal stockholders.
After discussion Messrs. Byrne and Hensler signified their willingness to each take the loss and cancel the debt by giving the Mercantile Realty and Improvement Company a release, dated January 1, 1919.
In June, 1921, the said corporation was dissolved and its assets were distributed in liquidation.
DECISION.
The determination of the Commissioner is approved.