*3097 1. DEDUCTION - ACTOR'S WARDROBE. - Where it is necessary for an actor to provide at his own expense certain costumes which are destroyed or ruined by the character of use required, the cost thereof may be allowed as an ordinary and necessary business expense.
2. PHYSICAL TRAINING. - Expenses for physical training incurred by petitioner deductible as business expenses.
3. TRAVELING EXPENSES. - Claims for traveling expenses determined and allowed and those for use of automobile disallowed for lack of evidence as to part of expenses borne by petitioner.
4. BAD DEBTS. - Claim for disallowed because no investigation made to ascertain worthelessness.
*1187 The petitioner seeks a redetermination of a deficiency in income tax of $1,504.42 for the year 1921. He alleges that the respondent erred in refusing to allow the following deductions from his gross income: (1) $1,279.83 cost of wardrobe used in his profession as an actor and totally destroyed; (2) $1,003.25 for expenses of training to keep in condition for "stunt" acting; (3) $2,585 traveling*3098 expenses; (4) $3,313.84 for cost and upkeep of an automobile; and (5) $3,275 for worthless debts.
*1188 FINDINGS OF FACT.
The petitioner is an individual who formerly resided at 801 Riverside Drive, New York, N.Y., but now resides at Hollywood, Calif. He is an actor by profession and during the taxable year was engaged as an actor in making and producing motion pictures. Petitioner is a "star" in his particular line of work and is what is known in the profession as a "stunt" actor. He performs feats of strength, daring, and agility such as jumping from one building to another probably fourteen or fifteen stories high and probably fourteen or fifteen feet across, swimming rapids, going through rapids in a canoe, jumping from moving trains or motors to moving airplanes, jumping chasms riding a motorcycle, walking wires, and many others of a similar character.
In engaging in such feats as swimming rapids, falling from motorcycles, and fighting, petitioner destroys his clothes and they become a total loss. During the taxable year he was in the employ of Pathe Exchange, Inc., and under his contract was required to furnish clothes at his own expense. These clothes were*3099 only used in petitioner's business of "stunt" acting. They were purchased in the year 1921. During the taxable year he destroyed clothes costing $1,036.40; expended $143.58 for pressing and cleaning, and gave $100 in tips, making $1,279.98 claimed as a deduction for loss on wardrobe.
For the purpose of keeping in proper physical condition to perform the strenuous feats required of him, petitioner went through a regular course of physical training during the taxable year. He employed a trainer at an expense of $500 and paid other incidental expenses, such as rubbing fees and the cost of proper paraphernalia and facilities, which resulted in a total expenditure of $1,003.25.
Incidental to the duties of the petitioner as a "stunt" actor, he made a number of trips to various parts of the country for the purpose of finding suitable "locations" for the performance of his feats, viz., natural chasms, waterfalls, rapids, high buildings, etc. During the taxable year he made trips to Florida, Maine, Massachusetts, Rhode Island, to various points in the States of New York, and Pennsylvania, and to other places, at an expense of $2,585.
During the taxable year, petitioner expended*3100 $3,313.84 in upkeep of his automobile, which was used at least part of the time by him in searching for locations. This sum is made up of charges for oil and gas, garage bills, repairs, licenses and chauffeur.
The contract with Pathe Exchange, Inc., under which the petitioner performed, contained the following provisions:
Eighth: Pathe hereby agrees to pay the traveling and hotel expenses of said Mr. Hutchison necessarily incurred by him in the service of Pathe in the course *1189 of his employment hereunder when said Mr. Hutchison's services shall be required outside of a radius of twenty-five miles of the studio designated by Pathe for the making of any motion picture serial hereunder.
Ninth: Mr. Hutchison hereby agrees to furnish at his own expense all modern wardrobe which he shall require to properly portray or enact the leading part in any of the serials in which he shall appear hereunder. Costumes other than those included in a modern wardrobe shall be furnished when required by Pathe without expense to Mr. Hutchison.
In addition to acting, the petitioner was also a writer of stories adaptable to moving pictures and during the year in question sold two such*3101 stories to Pathe Exchange, Inc., for $2,500 each. Part of the money expended for the cost and upkeep of his automobile and claimed as a deduction was expense incurred in gathering data and material to write these stories.
Petitioner kept no books of account, but kept a memoranda book in which from time to time he entered items of expense, which in some instances were itemized.
In 1920 or 1921, petitioner loaned to George Gray $250, to Eddie Phillips $25, and to his cousin, William Hutchison, $3,000. These loans have not been repaid and petitioner claims their deduction as worthless debts. They were not ascertained to be worthless during 1921, and petitioner has made frequent efforts to collect them since. Those to Gray and Phillips were personal loans, while that to William Hutchison was to enable him to go into a garage business. The garage business failed in a short time, but petitioner made no investigation as to the condition of its affairs or those of the debtor and did not ascertain the worthlessness of the debt during the taxable year. No written evidence of security in the form of notes or otherwise was taken of these loans.
OPINION.
MILLIKEN: Under the ninth*3102 clause of the contract between petitioner and Pathe Exchange, Inc., petitioner agreed to furnish at his own expense all modern wardrobe required to properly portray or enact his parts in the pictures contracted for. On account of the peculiar and hazardous nature of his performances, commonly called "stunt" acting, his clothing was frequently destroyed or rendered unfit for subsequent use.
During the taxable year petitioner in the course of his work destroyed or lost clothing which cost $1,036.40 and upon which he had expended the additional sum of $243.58 for tips and cleaning and pressing, making $1,279.98, which he claims as a deduction.
These clothes were strictly theatrical equipment and were used for no other purposes. They were just as much an ordinary and *1190 necessary business necessity as tools for a mechanic, machinery for a manufacturer, or rent or heat and light expenditures to a merchant. They were necessary for the performance of the petitioner's business, viz., "stunt" acting, and the cost thereof was a business and not a personal expense. The full amount of $1,279.98 should be allowed as a deduction. The claim of $1,003.25 for training to keep in*3103 physical condition includes payments by petitioner for massage treatments, physical trainer, rent for hand-ball court and gymnasium facilities, and other minor items. It is plain from the character of the "stunts" performed by petitioner, and from the evidence herein, that it would have been impossible for him to have performed them unless he was in excellent physical condition. Not only is this so, but it is evident that in order to be able to continue such acting he had to be continually in training, so as to be in condition to enact his part, or carry on his business. We think that under these circumstances these training expenses were an ordinary and necessary business expense and should be allowed as a deduction.
The next two claims for deductions are $2,585 for traveling expenses and $3,313.84 for cost and upkeep of automobile. These will be considered together, as they were for the same purposes and are somewhat intermingled. Petitioner claims that in the course of his employment it was necessary for him to travel to various parts of the country in search of "locations" for the performance of his "stunt" acts; that he did make various trips for that purpose and expended*3104 the sums claimed.
In the eighth paragraph of the contract between petitioner and Pathe Exchange, Inc., the latter agreed to pay the traveling and hotel expenses incurred by petitioner in the service of Pathe when petitioner was required to go more than 25 miles from the studio designated by Pathe.
Petitioner testified that he was not reimbursed by Pathe for traveling expenses incurred and paid by him in 1921, in the amount of $2,585, and same should be allowed as a deduction. Concerning the claim for cost and upkeep of an automobile, these expenses were incurred in the interest of Pathe and in his own interest for the writing of his own stories. The expenses of the various trips were not itemized, but are simply shown as a total sum for each trip, in round numbers. There is no separation of the amounts properly chargeable to Pathe and those which petitioner would be required to pay, and under such state of facts we can not speculate concerning the part, if any, as to which petitioner would be entitled as an ordinary and necessary business expense.
The deduction of $3,275 claimed for bad debts consisted of personal loans of $3,000 to William Hutchison, a cousin, $250 to*3105 George *1191 Gray, and $25 to Eddie Phillips. Relative to these loans, petitioner was frank in stating that he made no investigation on his own account to determine the worthlessness of the debts in question. He merely took his cousin's word and concluded that his debt and the others were worthless. We do not think this is sufficient. There must be some effort to ascertain the facts, and those ascertained should be submitted to the Board for consideration.
In the recent case of , in passing upon the allowance of bad debts, we again quoted with approval what was stated in , as follows:
The burden then is upon the petitioner to establish that it did make certain during the taxable year that the debts claimed as deductions were without value. We take it for granted that when Congress authorizes this Board to decide the issues arising between a taxpayer and the Commissioner in such a case as this, such taxpayer has not established the correctness of his contention by his bald statement that he believes it to be worthless, or that he ascertained it to be worthless*3106 or that, on undisclosed information he came to the conclusion that it was worthless. To so hold would be to put the Government in the hands of the taxpayer and substitute his judgment as to the conclusion to be drawn from the facts for that of the body created to decide the issue.
Nor is it a question whether the taxpayer believed the debt to be worthless. To so hold would be to grant an undue advantage to the pessimist or to the taxpayer who makes no investigation. In our opinion the burden upon the petitioner is to show what steps he took to collect the debt, what information came to his knowledge and what other circumstances existed which led him to his conclusion. It then becomes the duty of the Board to determine whether the debt was in fact ascertained to be worthless within the meaning of the law. .
We also stated in the Rowell case, supra:
In the instant proceeding the petitioner testified as to eleven of the items claimed as worthless debts, but no evidence was submitted to show when the debts were ascertained to be worthless, nor were the facts upon which such ascertainment*3107 was based presented in each case. Most of the debts were outstanding as of March 1, 1913, and it is not shown that they were more uncollectible in 1919 than in prior years.
Compare .
Tested by these rules, petitioner has not shown that he ascertained the debts to be worthless during the taxable year and deduction therefor can not be allowed.
Reviewed by the Board.
Judgment will be entered under Rule 50.