This is an appeal from the determination of a deficiency of $160.18 in income tax for the calendar year 1919. The question involved is whether the taxpayer is entitled to a deduction for the year 1919 of a claimed loss of $5,000 on worthless stock.
FINDINGS OF FACT.
1. The taxpayer is an individual residing at Los Angeles, Calif.
2. In March, 1919, the taxpayer sold to L. H. Patton 30 shares of ■the capital stock of the Bankers Cattle Loan Co. for $5,000. He had acquired the stock at $100 per share, a total of $3,000, when the company was organized about 1911. The company had a capital stock of $25,000 divided into 250 shares of a par value of $100 per .share. At the time of the sale of stock by the taxpayer the company had outstanding a loan of about $125,000 upon which the directors considered that there would be a heavy loss. In view of this situation the taxpayer guaranteed the purchaser of his stock against loss on this particular loan up to the amount of $5,000, the sale price of the stock.
3. At the close of the year 1919 the directors of the company charged off as a loss $25,000 of the amount of the outstanding loan. In the early part of 1920 the taxpayer ivas required to make good his guaranty against loss on the stock which he had sold, and paid the sum of $5,000 to the then owner of the stock, who had acquired it from Patton. The loss was claimed by the taxpayer upon his 1919 return.
DECISION.
The determination of the Commissioner is approved.
Arundell not participating.