dissenting on the last issue: The tax effect involved in the decision of this issue is slight. However, the rule laid down seems to me to be important enough to warrant comment.
The four debts in question under this issue were charged off the books of the taxpayer in 1933. Deductions were claimed therefor as worthless debts in its return for that year. This resulted in an addition in that amount to its net loss for such year, which would have been carried over to 1934 had it not been for the elimination of the right to carry over net losses, by the Revenue Act of 1934, section 117. The debts were ascertained to be worthless in 1934 but no charge-off then occurred — since, of course, they had already been charged off once and were never thereafter restored to petitioner’s asset account.
The majority holds the amount of these debts was deductible for 1934 under the rule of George H. Fraser, 6 B. T. A. 997, and Georgia Engineering Co., 21 B. T. A. 532.
It is possible both those cases are distinguishable from this case. But, in any event, I disagree with the conclusions of the Board in both of them and with that of the majority here. The opinions in the two cited cases stem from Mason Machine Works Co., 3 B. T. A. 745. In that case the Board found as a fact that a constructive charge-off occurred during the taxable year. Neither in the present case nor in the Fraser and Georgia Engineering Co. cases, supra, was there a charge-off of any kind.
The controlling statutory provision, section 23 (k) of the Revenue Act of 1934, allows as deductions “debts ascertained to be worthless and charged off within the taxable year * * The meaning thus expressed is clear and unambiguous. I think Congress meant exactly what it said. To entitle a taxpayer to the reduction there authorized, he must perform two affirmative acts — and they must both occur “within the taxable year.” To hold otherwise seems to me requires a rather flagrant violation of the statutory bounds of our jurisdiction and a trespass upon the constitutionally exclusive legislative function of Congress.
The Circuit Court of Appeals for the Second Circuit, in deciding Ludlow Valve Manufacturing Co. v. Durey, 62 Fed. (2d) 508, after our decisions in the Fraser and Georgia Engineering Go. cases, concisely states my position here:
Presumably so much, of those debts as were charged off in 1915 and 191© were ascertained to be worthless in those years, else they would not then have been written off, but we merely suggest that. The important fact is that, having previously been charged off, they could not be written off again in 1918. Darling v. Commissioner (C. C. A.) 49 F. (2d) 111; Avery v. Commissioner (C. C. A.) 22 F. (2d) 6, 55 A. L. R. 1277; Stephenson v. Commissioner (C. C. A.) 43 F. (2d) 348. To permit that would leave a taxpayer free to charge off bad debts whenever they were ascertained to be worthless and the exigencies *80of Ms business required the entry and to let him take the deduction then or in a later year as he preferred. This would give him the opportunity to wait before claiming the deduction until there should be a year in which his income would be sufficient to allow him the maximum benefit, instead of taking it as the statute required in the year when the debts were both ascertained to be worthless and charged off. * * * [Emphasis supplied.]