*3157 Proof held insufficient to overcome the presumption that the Commissioner's disallowance of certain deductions representing debts alleged to have been ascertained as worthless and charged off in the taxable year was correct.
*905 The respondent asserts a deficiency in income and profits tax for the year 1920 in the amount of $3,100.60. At the hearing it was agreed by the parties that all the issues except a claim for the deduction *906 of the amount of $3,924.16, alleged to represent debts ascertained to be worthless and charged off in the taxable year, had been settled and that the tax in controversy is $2,527.79.
FINDINGS OF FACT.
The petitioner is an Iowa corporation with its principal office at Manning, where it is engaged in the retail hardware business.
In the taxable year the petitioner kept no books of account reflecting its true income and tax liability. Upon audit of its income and profits-tax return for such year the Commissioner determined taxable income and tax liability by an analysis of surplus at the beginning and end*3158 of such year.
At the end of the taxable year the petitioner owned book accounts and notes against its customers representing goods sold during many years prior thereto, in the amount of $3,924.16. Such debts were not deducted from its gross income for the taxable year in its income and profits-tax return for such year and were to some extent carried forward on its books as assets for the succeeding year.
The accounts and notes that were considered worthless were marked with a "D" and when new books were opened, except in a very small number of instances, were not carried forward.
The petitioner's debtors for the most part were farmers, farm laborers and the tenants of farms. Prior to the taxable year many had moved away, some had died, others had become insolvent. None of the notes or accounts were given to any attorney for collection and no suits to secure payment were instituted. Petitioner's officers tried to collect the accounts and notes by personal interviews and by correspondence, but received nothing. The 17 notes involved total the amount of $1,552.69, and in amount range from $26 to $260; the 107 accounts receivable total $1,741.47, and range in amount from*3159 40 cents to $131.95. In some instances the debts in question date back as far as 1909.
OPINION.
LANSDON: The petitioner seeks to deduct notes and accounts receivable in the amount of $3,294.16 from its gross income in the taxable year as debts ascertained to be worthless and charged off in such year. From the evidence we are left in much doubt as to whether all the debts were ascertained to be worthless in the taxable year, whether any of such notes and accounts were actually charged off in said year, and whether all reasonable and usual methods had been exhausted in attempts to collect from the several debtors. From the meager record we are unable to say that the petitioner has overcome the presumption that the determination of the Commissioner as to the alleged bad debts was correct.
Decision will be entered for the respondent.