Memorandum Findings of Fact and Opinion
The Commissioner determined a deficiency of $3,340.71 in the income tax of the petitioner for 1947. The only issue for decision is whether the Commissioner erred in holding that the amount of $11,670.27, claimed as a bad debt of 1947, was a nonbusiness bad debt within the meaning of section 23(k)(4) of the Internal Revenue Code of 1939 to be taken into account as a short-term capital loss. The parties have agreed that the correct amount of the debt was $9,184.99 and it became worthless in 1947.
Findings of Fact
The petitioner filed his return for 1947 with the collector of internal revenue for the Third District of New York.
The petitioner has been a practicing physician in New York City since 1928 and devotes most of his time to that profession.
A patient, Edmund Crimi, interested him in 1947 in the formation of the Art Candle Corporation. The corporation was organized on June 10, 1947. The petitioner originally invested $1,000 in the corporation and received 50 per cent of the stock. Later, *76 he advanced money to the corporation and held as collateral for the loans the other 50 per cent of the stock. The petitioner, after his original investment, devoted an undisclosed amount of his time to the affairs of the corporation. He refused to advance any more money when he discovered that Crimi was operating the business dishonestly. The petitioner tried to continue the business without Crimi but was unable to do so. It was discontinued in 1947.
The petitioner had been interested as a partner during the World's Fair at New York in the operation of a game concession.
The petitioner, on his return for 1947, claimed a deduction of $11,670.27, with the explanation:
"Loans to Art Candle Corporation during year 1947 - uncollectible - corporation insolvent. I was President and a stockholder of this corporation."
The Commissioner, in determining the deficiency, disallowed the deduction as business bad debt but allowed $1,000 as a short-term capital loss.
The $9,184.99 advanced to Art Candle Corporation was a nonbusiness bad debt.
Opinion
MURDOCK, Judge: The petitioner has failed to show that the bad debt was proximately related to any business which he regularly carried*77 on during 1947. Cf. A. Kingsley Ferguson, 16 T.C. 1248">16 T.C. 1248; Harold Kushel, 15 T.C. 958">15 T.C. 958; Jan G. J. Boissevain, 17 T.C. 325">17 T.C. 325; Fred A. Bihlmaier, 17 T.C. 620">17 T.C. 620.
The petitioner apparently recognizes the hopelessness of his case because he has filed no brief. The evidence fails to show that the Commissioner erred in treating this bad debt as a non-business rather than as a business bad debt.
Decision will be entered for the respondent.