*3270 Deduction from income on account of debts alleged to have become worthless in the taxable year disallowed.
*304 The respondent has asserted a deficiency of $1,876.35 in in income and profits tax for the year 1920. The only issue is whether certain notes were ascertained to be worthless in the taxable year.
FINDINGS OF FACT.
The petitioner is an Iowa banking corporation with its principal place of business at Des Moines.
At the beginning of the taxable year the petitioner held the notes of C. J. Bristol, Carmen Whitney, and W. R. Vice, in the respective amounts of $18,000, $656.32, and $2,500, each acquired prior to that date at a cost at least equal to its face value. The Bristol note was secured by deeds on 660 acres of Texas land; the Whitney note by a mortgage on 160 acres of land in South Dakota; and the Vice note by deeds to 640 acres of land in Canada. On August 23, 1920, petitioner credited the Bristol note with a payment of $4,435 realized from the sale of 480 acres of the Texas land, the deeds of which were held as security therefor.
*3271 In its income and profits-tax return for 1920, petitioner deducted the amounts of $8,000 on account of the Bristol note, and $656.32 and $2,500 on account of the Whitney and Vice notes, respectively, from gross income, as debts ascertained to be worthless and charged off in the taxable year. At the date of such charge-off and deduction the petitioner held a deed to 180 acres of Texas land as security for the unpaid balance of the Bristol note and was still in possession of the collateral taken to secure the Whitney and Vice notes.
OPINION.
LANSDON: It appears from the evidence that at the date of the charge-off for which deduction is here claimed the petitioner held collateral taken as security for each of the notes alleged to have become worthless in the taxable year. The action of the Commissioner in disallowing the deductions claimed is approved (1) because, as to the Bristol note, under the Revenue Act of 1918 no partial charge-off of a debt alleged to be worthless is authorized, and (2) because, as to each of the notes in question, the petitioner held collateral *305 of some value, and at that date it was impossible to determine that any loss had been sustained. *3272 ; ; ; ; ; ; .
Decision will be entered for the respondent.