8 B.T.A. 1062

Appeal of S. Stanwood Menken

Docket No. 5771.

Promulgated October 29, 1927.

B. B. Pettus, Esq., Edward Clifford, Esq., and Wilton H. Wallace, Esq., for the petitioner.

A. H. Fast, Esq., for the Commissioner.

*1063OPINION.

Van Fossan:

From the record of this case it appears that petitioner was a member of a partnership engaged in the practice of law, and that the alleged bad debt arose from the failure of a group of persons engaged in promoting a telephone merger to pay for legal services furnished them by the partnership. The agreed charge for services not having been paid to the partnership, petitioner deducted as a bad debt on his personal income-tax return for 1918 an amount equal to one-third of the charge, said amount being proportionate to his interest in the partnership.

Petitioner is claiming the deduction as an individual. The debt was one owing to the partnership. A partnership, under the law though not itself taxable, must file a return and should take the partnership deductions. After computation of the net income the individuals must include their distributive shares in their individual tax returns. In this case the record is silent as to how the partnership treated the account in its return. Presumptively, its return was correctly made. If so, this alleged bad debt, if deductible, was deducted in the partnership return and its deduction has been reflected in the reduced proportionate share of net income received by petitioner. We do not know this to be the fact. The record is wanting, but we can not presume to the contrary. We know of no provision of law allowing a partner to take as a personal deduction on his individual return a proportionate part of a bad debt owing to a partnership of which he is a member.

*1064Though the above decision makes it unnecessary to consider the case further, attention is called to the fact that it does not appear that the account was ever charged off the partnership’s books or that it was ever carried into petitioner’s books, either as -a “ charge on ” or a “charge off.” (See Appeal of Charles Collin, 1 B. T. A. 305; J. Noble Hayes v. Commissioner, 7 B. T. A. 936.) Our decision makes it unnecessary to consider whether or not the New York statute of limitations had run against the collection of the account, as contended by petitioner.

Reviewed by the Board.

Judgment will be entered for the Commissioner.

Appeal of Menken
8 B.T.A. 1062

Case Details

Name
Appeal of Menken
Decision Date
Oct 29, 1927
Citations

8 B.T.A. 1062

Jurisdiction
United States

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