*859 1. Under the facts shown there should be included in the taxable income of the three petitioners, as additional compensation for services rendered to their employer corporation, certain amounts representing the fair market value of shares of stock delivered to them by that corporation during the taxable year.
2. A loss deduction claimed by petitioner Priddy is not shown to have been sustained during the taxable year and is disallowed.
3. Respondent's action in disallowing the deduction of a portion of certain traveling expenses claimed by petitioner Priddy is sustained.
4. There should be included in the taxable income of petitioner Lipstate all the commissions earned and made available to him during the taxable year, only a portion of which he reported in his return.
*19 The respondent has determined deficiencies in income tax for the years 1935 and 1936 as follows:
| Docket No. | 1935 | 1936 | |
| Walter M. Priddy and wife | 97845 | $3,969.50 | $958.14 |
| Phillip Harry Lipstate and wife | 93255 | 631.73 | |
| C. C. Crews | 96049 | 332.35 |
*860 One issue is common to all three petitioners, namely, whether the respondent erred in including in their taxable income, as additional compensation for services rendered, the fair market value of certain shares of stock which were delivered to them in 1935 by their employer, the Sabine Royalty Corporation. Two additional issues are presented in the petition of Walter M. Priddy: First, whether he sustained a deductible loss in 1935, either ordinary or capital, as the result of a sale under foreclosure of certain real property which he had previously conveyed to creditors in 1927 or 1928; and, second, whether the respondent erred in disallowing the deduction of a portion of certain business expenses claimed by him to have been incurred and paid in 1935 and 1936. One other issue is presented in the petition of Phillip Harry Lipstate, namely, whether he reported in his taxable income all of the commissions received by him in 1935.
FINDINGS OF FACT.
All of the petitioners are residents of the State of Texas. The petitioners Priddy and Crews filed their income tax returns with the collector for the second district of Texas at Dallas, Texas.
On or about October 1, 1931, the*861 Sabine Royalty Corporation was chartered under the laws of the State of Delaware, with authorized capital of 50,000 shares of no par value common stock. It was organized by the petitioners Walter M. Priddy, Phillip Harry Lipstate, and C. C. Crews and several other individuals, for the purpose of acquiring oil properties, oil royalties, and oil payments and to trade therein. Its office and principal place of business is at Tyler, Texas.
*20 At the organization meeting held by its directors on October 8, 1931, a resolution designated as "Motion No. 12" was offered and adopted, which reads as follows:
Mr. Chairman, I move that it be spread upon the minutes of this, our first directors' meeting, the understanding with Mr. W. M. Priddy, who is taking the leading part in organizing this company, that ten per cent of the first authorized common stock issue be held in the treasury to be issued to him, or as he may direct, as a carried interest, as soon as the common stock dividends pay us, the original investors, our cost of $4 per share.
At the time this resolution was adopted it was mutually understood by the interested parties that out of the shares of stock to be thus*862 held in the treasury for the petitioner Priddy, certain of the said shares, if and when issued, would be delivered to other individuals who were assisting in the organization and promotion of the corporation. It was agreed that petitioner Lipstate would be entitled to receive 1,000 shares, provided he put forth his best efforts in promoting the business of the corporation, became its secretary and treasurer, and served on its executive committee. It was also agreed that petitioner Crews would be entitled to receive 300 shares, provided he served as president of the corporation, as a member of the executive committee, and used his influence in promoting the business of the corporation. Several other individuals who were assisting in the organization were to receive smaller amounts of stock.
Also at the organization meeting another resolution was adopted directing that after one-half of the authorized common and preferred stock of the corporation had been sold the original subscribers would be given an opportunity to subscribe pro rata for the remaining one-half of the common stock at the original price of $4 per share before it was offered to others, even though the stock at that*863 time might be regarded as worth much more.
At a meeting of the stockholders of the Sabine Royalty Corporation of Delaware held on May 12, 1932, the following resolution was offered and adopted:
It appears that Motion 12 of the minutes of the meeting of the organizing directors held October 8, 1931, was not clear. For the purpose of clearing up the matter, I move that it be understood that the ten per cent carried interest referred to will apply only in proportion to the amount of outstanding common stock, and such ten per cent carried interest shall not be subject to delivery until the dividends of the original investors and the carried interest shall amount to $4 per share, or until W. M. Priddy pays in sufficient to make the total of dividends and cash payments to apply on the carried interest to amount to $4 per share. All purchasers of common stock prior to June 1, 1932, are to be regarded as original investors.
On February 2, 1933, there had been issued and on that date there were outstanding 28,777 shares of common stock of the Sabine Royalty *21 Corporation of Delaware. This did not include the shares of stock to which petitioners and the other individuals*864 would be entitled upon the happening of the contingencies referred to in the above resolutions. Those shares remained unissued.
On February 24, 1933, the Sabine Royalty Corporation was incorporated under the laws of the State of Texas, with the same charter privileges as had been granted to it by the Delaware charter. All of the assets of the Delaware corporation were transferred to and all of its liabilities were assumed by the new Texas corporation. The stockholders of the Delaware corporation surrendered their certificates of stock and received in exchange an equal number of shares in the Texas corporation. The declared or stated value of the no par value common stock of the new corporation was fixed at $2 per share, resulting in a total declared or stated capital of $100,000. The authorized but unissued stock in the Delaware corporation remained authorized but unissued by the Texas corporation.
On November 10, 1933, a meeting of the executive committee of the Sabine Royalty Corporation of Texas was held, at which time the following resolution was offered and adopted, subject to the ratification by and approval of the board of directors and stockholders:
WHEREAS, W. *865 M. Priddy of Wichita Falls, Texas, was largely instrumental in the organization of the Sabine Royalty Corporation, and it was understood that he should receive, conditioned upon the performance of the work which he was to do, certain common stock; and whereas the Sabine Royalty Corporation, Texas, took over the affairs of said original company, in recognition of the rights of said W. M. Priddy, and whereas there has never been a resolution adopted by the directors of the Sabine Royalty Corporation, Texas, expressing such agreement, now be it resolved that there shall be held in the treasury 10 percent of the first authorized common stock, to remain the property of the corporation until the time and upon the contingency hereinafter mentioned, to be delivered to W. M. Priddy only upon full compliance with the following conditions: That he will continue the management of the affairs of the Sabine Royalty Corporation upon a nominal salary to be fixed from time to time, and if and when the common stock dividends paid to the original investors have equaled the sum of $4 per share, said 10 per cent of the stock shall be delivered to W. M. Priddy, provided that said W. M. Priddy shall continue*866 as aforesaid until such time that said dividends shall equal $4 per share, but provided, however, that should the said W. M. Priddy die, or become physically or mentally unable to further perform his duties in looking after affairs of said Sabine Royalty Corporation, so that the failure so to do shall not be due to any fault on his part, said stock shall nevertheless be delivered to his then living children, if and when the dividends aforesaid equal the sum of $4 per share to the original investors.
This resolution was subsequently ratified and approved by the board of directors and stockholders.
Prior to February 24, 1933, the Sabine Royalty Corporation of Delaware had paid cash dividends aggregating 90 cents per share upon issued and outstanding stock. Thereafter the Texas corporation *22 continued to pay cash dividends monthly or oftener. On July 31, 1935, it paid a cash dividend of 10 cents per share, which brought the aggregate amount of the dividends per share paid to that date on the stock of both the Delaware corporation and the Texas corporation to a total of $3.95. Under date of August 31, 1935, the Texas corporation paid a further cash dividend of 10 cents*867 per share, which brought the 1935 dividends up to 85 cents per share and made an aggregate of $4.05 in dividends paid upon issued and outstanding stock.
On August 29, 1935, the petitioner Priddy wrote a letter to the Sabine Royalty Corporation calling attention to the fact that the August dividend would bring the aggregate dividends up to $4.05 per share and that the 5,000 shares which were to be delivered to his order if, as, and when the aggregate dividends amounted to $4 per share were now subject to delivery. He stated that, although the right to the stock was in his name, it had been mutually agreed that a portion thereof was to go to various parties and he requested that the stock be issued as follows: 3,150 shares to himself or his nominees, 1,000 shares to Lipstate, 300 shares to Crews, and the remaining 550 shares in small amounts to several other individuals.
Pursuant to the instructions given by petitioner Priddy in the above letter, and during 1935, the 5,000 shares of stock in question were issued and delivered to the parties entitled thereto and one-half of the August dividend, or 5 cents per share, was paid over to them in cash. Prior thereto no dividends had*868 been declared or paid on this 5,000 shares of stock.
On or about September 1, 1935, the common stock of the Sabine Royalty Corporation of Texas was being sold to the public at $7 per share.
Petitioner Priddy took the leading part in the organization of the Sabine Royalty Corporation of Delaware and its successor, Sabine Royalty Corporation of Texas, and since its organization he has served as vice president, general manager, director, and a member of the executive committee. He has also been a stockholder of and a commission salesman of stock and bonds for the corporation. Throughout this period he has devoted substantially all of his time to the promotion and business of the company. During 1935 he received a salary of $6,000 from the Sabine Royalty Corporation and commissions in the total amount of $2,991. During 1936 he received a salary of $7,200 from the Sabine Royalty Corporation and commissions in the amount of $5,982.04. During 1935 and 1936 he was also a salaried officer of the Ellis Drilling Co., with headquarters at Duncan, Oklahoma, and the Walter Priddy Corporation of Wichita Falls, Texas. During 1935 he received salary from these *23 two corporations*869 in the respective amounts of $2,400 and $1,200, and in 1936 the respective amounts of $3,000 and $1,000.
Lipstate and Crews assisted petitioner Priddy in the organization, promotion, and development of the Sabine Royalty Corporation, and since its organization they have served as members of the board of directors, the executive committee, and have been stockholders of the corporation. Lipstate acted as secretary and treasurer of the corporation, devoted most of his time to its business, and in 1935 received a salary of $4,200. Crews served as president of the corporation, devoted a part of his time to its affairs and during 1935 received a salary of $1,200.
In their income tax returns for 1935 the three petitioners did not report as income the receipt of the shares of stock in the Sabine Royalty Corporation received by them during that year. In his determination of the deficiencies the respondent added to the taxable income of Priddy, Lipstate, and Crews the respective amounts of $22,050, $7,000, and $2,100, explaining that such amounts represented the fair market value of the shares of stock received by them during the taxable year for services rendered.
The corporate*870 tax return of the Sabine Royalty Corporation for 1935 showed net income of $100,106.74 and tax liability of $13,764.68. No deduction was claimed in the return for compensation paid to its employees on account of the 5,000 shares of stock which were issued and delivered as shown above. After the respondent determined the deficiency in these proceedings the Sabine Royalty Corporation filed a claim for refund, asserting that, since the respondent had held in the case of the individuals that the receipt of the stock constituted the receipt of compensation for services rendered, it should be allowed a corresponding deduction from its 1935 income for the compensation paid. This claim for refund was rejected by the respondent.
In 1927 the petitioner, Walter M. Priddy, was a member of a partnership known as "American Refining Company", with its offices and principal place of business at Wichita Falls, Texas. He was also a stockholder in and president of a Delaware corporation of the same name. During that year the partnership, the seven partners, and the corporation got into serious financial difficulties and made conveyances of all their properties to a group of three or four individuals*871 selected by their creditors. Thereafter a petition in bankruptcy was filed against the debtors. Subsequently in 1927 the affairs and properties of the corporation, the partnership, and the nonexempt properties of the seven partners, including the petitioner, were placed in the hands of receivers by the United States District Court for the Northern District of Texas. Subsequently, and on *24 October 1, 1927, a creditors' committee, representing approximately 97 percent of the creditors of the corporation, the partnership, and the individuals concerned, was created for the purpose of acquiring all the properties subject to the debts and to conserve and sell same for the benefit of the various creditors. The creditors' committee was to operate under a declaration of trust dated December 10, 1927, and was known as the "Creditors' Committee of the American Refining Properties." The trust instrument recited that as near as could be ascertained the debts of the partnership amounted to about $2,455,000, and the debts of the corporation to about $4,028,000; that the personal debts of the various partners totaled about $2,983,000; that the personal debts of the partners, to a great*872 extent, were incurred for the benefit of the corporation or the partnership; and that the statements submitted by them would necessarily reflect some duplications as to liabilities. The plan of reorganization of the affairs of the debtors as set forth in the declaration of trust empowered the committee to acquire title, legal and equitable, to all the properties of the debtors, to sell and convey same, and to distribute the proceeds to the creditors. The committe issued class A certificates to the secured creditors and class B certificates to the unsecured creditors. It was understood that the committee was purely a liquidating committee and the only activities it was to engage in were those required for the conservation and liquidation of the properties. The trust instrument did not contain any provision with respect to the disposition of any remaining residue, if any existed after the debts were paid, but it was orally understood between the interested parties that any such residue would be delivered back to the debtors. It was estimated that the combined claims of the creditors were in excess of $6,000,000 and that the combined value of the properties to be taken over was around*873 $4,000,000.
Among the properties transferred by Priddy to the group of three or four individuals selected by the creditors, who in turn transferred said properties to the receivers, was a certain farm known as the Brooks Thompson farm, consisting of about 1,410 acres of land located in Clay County, Texas. This farm had been acquired by him in 1920 for a total consideration of $90,000, of which $10,000 had been paid in cash, $55,000 in vendor's lien notes, and the assumption of an existing mortgage held by the John Hancock Mutual Life Insurance Co. in the amount of $25,000. Sometime prior to 1927 he had paid the vendor's lien notes in full. Subsequently he procured an additional loan of $15,000 from the John Hancock Insurance Co., and as security gave a second mortgage on the property. By 1927 this second mortgage had been reduced to $13,500. After acquiring the property he expended about $7,000 in building granaries, *25 barns, a tenant house, and a large chicken brooding farm. The record does not show the depreciated cost of these improvements.
On July 24, 1928, the receivers, pursuant to and in compliance with an order entered by the District Court in the receivership*874 proceedings, held a public sale of all of Priddy's nonexempt property, including the Brooks Thompson farm. The creditors' committee purchased the said properties for a consideration of $335,000, which was the highest bid received therefor. The receivers executed a deed to the properties to the creditors' committee, in which deed Priddy joined. Priddy estimated that at that time he had assets in the amount of about $2,000,000. In the order of the court approving the sale it was recited that the committee, as assignee, held unsecured or partially secured claims against him in the amount of $3,038,023.53, which was 97.66 percent of the total claims entitled to distribution under the orders of the court.
The livestock and equipment situated on the Brooks Thompson farm were held to be exempt from the claims of the creditors and subsequent to the sale and conveyance of the property to the creditors' committee Priddy rented the farm from the committee, maintained a tenant thereon and continued its operation under an arrangement whereby he paid an annual rental or a portion of the profits. This arrangement continued for about four or five years. The record does not show who paid the*875 taxes on the premises or insurance, if any, on the buildings during this period.
On July 2, 1935, the John Hancock Insurance Co. foreclosed the second deed of trust on the Brooks Thompson farm and purchased the said property at the foreclosure sale for $7,500. Following the foreclosure sale the John Hancock Insurance Co. instituted suit against Priddy for a deficiency judgment and in January 1937 he paid $1,000 in cash to the insurance company in settlement of the claim for the deficiency.
The creditors' committee, while operating under the trust instrument above mentioned, made three distributions to the creditors, 8 percent in 1928, 2 percent in 1929, and the last in 1935, amounting to .013 of 1 percent. In December 1935 the committee, having disposed of all the property conveyed to it and having paid all the funds in its possession on the claims of the various creditors, ceased to function in that capacity. No residue ever existed and nothing remained to be paid over to Priddy or any of the other debtors.
During 1935 and 1936 petitioner Walter M. Priddy maintained a residence in Wichita Falls, Texas, where his wife and three sons resided. He was away from Wichita Falls*876 about 75 percent of the time. The affairs of the Sabine Royalty Corporation, to which he devoted substantially all of his time, required him to maintain regular *43 living quarters at Tyler, Texas. He spent about 30 or 40 percent of his time at that place. In addition to his regular duties as vice president and general manager of the corporation, he was also engaged in the business of selling stocks and bonds of the corporation on a commission basis. About 50 percent of his time was devoted to selling stocks and bonds. Any traveling expenses incurred by him in connection with the affairs of the Ellis Drilling Co. and the Walter Priddy Corporation were paid, with some few exceptions, by those corporations. The Sabine Royalty Corporation maintained a traveling expense account and in its return for 1935 claimed a deduction for such expenses in the amount of $992.39. Traveling expenses incurred by Priddy in connection with the sale of stocks and bonds were paid by him and were not charged to the corporation.
Priddy's connections with the three aforementioned corporations and his duties in connection with the sale of stocks and bonds of the Sabine Royalty Corporation necessitated*877 considerable traveling over a large part of the State of Texas. He kept no records of the traveling expenses incurred by him during the taxable years. During each of those years he operated a Plymouth automobile approximately 25,000 miles for business and pleasure. He did most of his traveling by automobile and took readings from his speedometer at the beginning and end of each year. From the gross mileage he made an arbitrary reduction to arrive at the mileage for business. For 1935 he estimated the business mileage to be 23,086, and a substantially similar distance in 1936. Included in this mileage were the miles he covered in visiting his family in Wichita Falls every other week end. The distance between Tyler, which was his post of duty during the taxable years, and Wichita Falls, was 245 miles.
In his income tax return for 1935 Priddy claimed deductions for car espenses in the amount of $1,104.30, which amounted to approximately 5 cents per mile for the estimated business mileage. He also deducted $1,200 for meals, hotel rooms, etc., which amount represented his estimate of such expenditures during the time spent away from Wichita Falls and included such expenses while*878 in Tyler. In determining the deficiency the respondent disallowed the deduction of a portion of such traveling expenses to the extent of $926.07.
In his return for 1936 petitioner Priddy claimed a deduction of $2,776 for traveling expenses, which included automobile expenses, meals, hotel rooms, etc. This figure was arrived at in substantially the same way as the figure for 1935. The deduction in 1936 included $301, which represented expenses incurred in two trips made to North Carolina in connection with the affairs of his wife's estate. In determining the deficiency for 1936 the respondent disallowed $1,116.06 of the traveling expenses claimed as a deduction for that year.
*27 In addition to his regular duties as secretary and treasurer of the Sabine Royalty Corporation, the petitioner Lipstate throughout 1934 and 1935 sold stocks and bonds of the corporation on a commission basis. He kept no individual books and had no written records of commissions earned and collected during the year in question. Two separate and distinct accounts relating to transactions with the petitioner Lipstate were kept on the books of the Sabine Royalty Corporation. One of these accounts*879 is referred to as his "commission account", which constituted a record of stock and bond sales effected by Lipstate and the amount of commissions due him from such sales. The other account is referred to as the "employee account", which was a general account in which were recorded all personal transactions between the corporation and Lipstate. The commission account shows total credits on sales made in 1935 in the amount of $3,261.20, which includes an opening entry as of January 1, 1935, in the amount of $867 representing commissions earned and received in 1934. After eliminating this latter item and also adjusting debit entries in the total sum of $757, the account shows net commissions earned in 1935 in the amount of $1,637.20.
Lipstate reports his income on the cash receipts and disbursements basis and in his return for 1935 he reported the receipt of commissions in the amount of $1,315.20. In computing the deficiency the respondent determined that his account on the books of the Sabine Royalty Corporation showed total credits for commissions earned in 1935 in the amount of $2,082.20; that he reported only $1,315.20; and that the difference, or $767, should be added to his*880 income.
OPINION.
TURNER: The respondent has included in the taxable income of the three petitioners, Priddy, Lipstate, and Crews, as additional compensation for services rendered to the Sabine Royalty Corporation, certain amounts representing the fair market value of the shares of stock delivered to them during the year 1935. He relies on , and several other cases cited and discussed by the court in that decision.
The petitioners contend that they acquired the shares of stock by purchase, rather than as compensation for services rendered, and that no taxable gain in any amount was realized upon the receipt thereof. On brief they cite ; ; and , but they do not seem to rely on any particular case.
*28 The argument presented by the parties seems to be predicated on the assumption that the transaction between Priddy and the corporation, in so far as the tax question is concerned, should be treated the same as the*881 transactions between the corporation and Lipstate and Crews. We think the assumption is correct, because they all received the stock in the same manner and under the same corporate resolutions.
In the resolution of October 8, 1931, the only reason indicated or explanation given for the understanding that the corporation would hold in its treasury 10 percent of the first authorized stock for petitioner Priddy was that he was "taking the leading part in organizing this company." The resolution does not contain anything indicating that the corporation agreed to sell or that he agreed to purchase the stock in question, nor does it indicate that they contemplated such a transaction. It is true that at the same time another resolution was adopted which gave the original subscribers the opportunity, after one-half of the stock of the corporation had been sold, to subscribe pro rata for the remaining one-half of the stock at the original price of $4 per share before it was offered to others, but the stock in question was not acquired under this latter resolution.
The stock was in fact delivered to the three petitioners under and pursuant to the resolution adopted by the Texas corporation*882 on November 10, 1933, and the provisions contained therein leave no doubt as to the nature of the transaction. That reslution recited that petitioner Priddy was "largely instrumental" in the organization of the corporation and that it was understood that he would receive the stock in question "conditioned upon the performance of the work which he was to do." Then the resolution provided that the stock would be "held in the treasury" and "remain the property of the corporation" until the time and upon the contingency mentioned and would be delivered to Priddy only upon full compliance with certain conditions, namely, that he "will continue the management of the affairs of the Sabine Royalty Corporation upon a nominal salary to be fixed from time to time, and if and when the common stock dividends paid to the original investors have equaled the sum of $4 per share." Priddy had agreed with Lipstate and it was understood from the beginning by all the interested parties that the latter would be entitled to receive a portion thereof, or 1,000 shares, provided that he put forth his best efforts in promoting the affairs of the corporation, also that he would become its secretary and treasurer*883 and would serve on the executive committee. It was likewise agreed and understood that Crews would be entitled to receive 300 shares, provided he served as president of the corporation and a member *29 of the executive committee and used his influence in promoting the affairs of the corporation. The three petitioners performed the duties required of them and in August 1935 the dividends paid on issued and outstanding stock aggregated more than $4 per share and the stock in question was delivered to them.
The transactions as finally consummated clearly lacked certain essential elements of sales. The corporation never agreed to sell the stock, the petitioners never agreed to purchase it, and they did not in fact purchase it. If they had not rendered the services required of them and if the dividends on outstanding stock never had aggregated as much as $4 per share, they might never have become the owners of the stock. Assuming that the petitioners could have purchased the stock in question at any time under the resolution above referred to by paying in the difference between the aggregate dividends paid per share and $4, the fact still remains that they did not do so with*884 respect to the stock in question. They gave nothing for the stock except their services, and we think they received it as compensation for such service.
The record shows that none of the stock in question was issued or outstanding and no dividends were paid thereon until it was delivered to petitioners in August 1935. They were not entitled to any part thereof until it was delivered to them, and it constituted income to them at that time to the extent of its fair market value. The respondent has determined that the fair market value of the stock was $7 per share and on that basis has computed the additional compensation received by each petitioner. They have not shown that this determination is erroneous, and it is accordingly sustained.
The next issue is whether the petitioner, Walter M. Priddy, sustained a deductible loss in 1935, either ordinary or capital, as a result of the foreclosure by the John Hancock Life Insurance Co. of the second deed of trust on the Brooks Thompson farm.
Petitioner Priddy contends on brief that as a result of the foreclosure sale his interest in the property, which he claims*885 exceeded $55,000, became a total loss in 1935 and is deductible from gross income in its entirety as an ordinary loss, citing ; and ; certiorari granted, . His position seems to be that, although legal title had passed to others in 1927 or 1928, he still retained some interest or equity in the property until the date of the foreclosure sale and that the loss was not realized until that time.
The respondent contends that the petitioner lost his investment in the property prior to or during 1928 and that the loss is not deductible in 1935. He argues that the transaction whereby the petitioner conveyed the property to the committee of three or four individuals *30 selected by the creditors, which conveyance was made in 1927 or 1928, must be considered a sale of the property as of the date of the conveyance, and when so considered it establishes the loss of his investment in the property, citing *886 ; certiorari denied, , or if he retained any interest in the property subsequent to that conveyance, such interest was acquired by the receivers, as officers of the court, when the property was transferred to them, citing , and that such interest was subsequently disposed of by sale to the creditors' committee, citing ; certiorari denied, . He also argues that the petitioner abandoned any interest he had in the property prior to 1935, citing ; ; and . He further contends that the cost of improvements on the farm could not be included in petitioners cost basis because he has not proven the depreciated cost of such improvements.
The petitioner's contention that he retained an interest or equity in the property until the date of the foreclosure sale seems to rest on the fact that the debtors*887 had an oral understanding with the creditors that if any residue remained after all the debts were paid, such residue would be distributable to them, and further that they had hopes of thereby salvaging something out of the properties conveyed.
The record shows that at the time the creditors' committee took over the properties it was estimated that the combined claims of the various creditors were in excess of $6,000,000 and that the combined value of all the properties to be taken over was around $4,000,000. See . The record also shows that at that time the committee held unsecured and partially secured claims against the petitioner Priddy in the amount of $3,038,023.53, and he testified that the total value of his assets was around $2,000,000. It thus appears doubtful whether he had any well founded hopes of salvaging anything out of the properties conveyed. Moreover, the hope that some residue would remain after the debts had been paid and the oral understanding that such residue would be distributed to the debtors do not establish that the loss was sustained in 1935. The facts of record indicate that the loss was sustained*888 in 1927 or 1928, and we think that is the only reasonable conclusion that can be reached. In any event we do not think the petitioner has overcome the prima facie correctness of the respondent's determination, and it is accordingly sustained. In view of this conclusion, it is unnecessary to consider the question of whether a loss sustained as a result of a foreclosure sale constitutes an ordinary or capital loss, which question is pending before the Supreme Court.
*31 The next issue involves the question of whether the respondent erred in disallowing the deduction of a portion of the business expenses claimed by the petitioner Priddy to have been incurred and paid in 1935 and 1936.
On his return for 1935 Priddy deducted the amount of $2,304 as business expenses, $1,200 of which represented expenditures for meals, hotels, etc., while he was absent from Wichita Falls and included living expenses while in Tyler, and the remaining $1,104 represented automobile expenses computed at the rate of 5 cents permile, which included mileage covered on week-end trips between per mile, which included mileage covered on week-end trips between business expenses an amount of $2,776 representing*889 combined expenditures for automobile, meals, hotels, etc., which amount was arrived at by substantially the same method of computation as employed in arriving at the deduction for 1935. Of the deductions claimed the respondent disallowed $926.07 for 1935 and $1,116.06 for 1936.
The dispute centers around the location of Priddy's "home" as that term is used in section 23(a) of the Revenue Acts of 1934 and 1936. In , we said that a taxpayer's "home", as that term was used in the statute, was his "place of business, employment, or the post or station at which he is employed." We held that a taxpayer may not keep his place of residence at a point where he is not engaged in carrying on a trade or business and take a deduction for his living expenses while away from such residence or deduct traveling expenses for trips between his place of business and such residence. That case has been consistently followed. ; affd., ; *890 ; and .
The facts here show that Priddy's "home", as that term is used in the applicable revenue acts, was at Tyler, Texas, which was his principal place of business and the place where his employment by the Sabine Royalty Corporation necessitated the maintenance of regular living quarters. He was not away from his "home" in the pursuit of a trade or business while he was in Tyler and her is not entitled to deduct the cost of meals and lodging incurred and paid while he remained in that city. The same is true with respect to the expenses ascribed to the automobile trips made to Wichita Falls for the purpose of visiting his family over week ends.
While it is true that Priddy was also a salaried officer of the Ellis Drilling Co. and the Walter Priddy Corporation, which offices required him to make occasional trips to Duncan, Oklahoma, and Wichita Falls, he testified that those corporations usually paid his *32 traveling expenses. If there were any exceptions during the taxable years, they are not shown by the record.
Being of the opinion that Priddy was not entitled to deduct*891 living expenses while in Tyler, nor the automobile expenses of the weekend trips to Wichita Falls, and considering the amount of time spent at Tyler and the number of such week-end trips, we think the respondent was reasonable in his disallowance of $926.07 of the business expenses claimed for 1935 and $1,116.06 for 1936. His action is accordingly sustained.
In the notice of deficiency the respondent determined that in 1935 the petitioner Lipstate received commissions in the amount of $2,082.20, that he reported only $1,315.20, and that the difference of $767 should be added to his income. Lipstate testified that the credits entered in his "commission account" included an opening entry of $867 under date of January 1, 1935, which had in fact been earned in 1934 and had been collected in cash during that year and reported in his 1934 income.
On brief the respondent seems to be willing to accept the explanation offered by Lipstate (at least he does not argue otherwise), but he is still unwilling to concede the issue. He now contends that during 1935 commissions of $3,175.40 were credited to the "commission account." Then, for some reason, he deducts $59.17, which he says was*892 the credit balance in Lipstate's "employee account", and arrives at the figure of $3,116.23, which he states was either paid or beneficially credited during that year. From this figure he deducts $2,182.20 ($1,315.20 reported in 1935 plus $867 allegedly received in 1934) and arrives at the figure $934.03, which he now contends that Lipstate neither reported as income nor accounted for.
With respect to this new contention of the respondent it will suffice to point out that the $3,175.40 which he now contends was credited on the "commission account", represents gross credits and does not take into consideration the adjusting debits entered thereon.
We have carefully checked a photostatic copy of the commission account introduced as evidence and we have found that it shows net credits representing commissions earned in 1935 in the total sum of $1,637.20. On brief the petitioner contends that in computing the net credits entered on the account, two offsetting items in the respective amounts of $80 and $81, which had not been entered as debits on the account, should be taken into consideration. The explanation entered on the account with respect to these two items is so confusing*893 that we are unable to reach any such conclusion and in the absence of any other evidence on this point the contention is rejected. The account shows net credits in the amount of $1,637.20 and, since Lipstate *33 reported only $1,315.20, the difference should be added to his taxable income.
Several other issues were raised in the petitions of Walter M. Priddy and C. C. Crews, but they presented no evidence or argument with respect thereto and such issues will be regarded as having been abandoned by them.
Decisions will be entered under Rule 50.