United States v. White Dental Mfg. Co., 274 U.S. 398 (1927)

United States v. S. S. White Dental Manufacturing Company

No. 291

Argued April 22, 1927
Decided May 16, 1927
274 U.S. 398

CERTIORARI TO THE COURT OF CLAIMS

Syllabus

1. Under § 234 of the Revenue Act of 1918, which authorizes the deduction from gross income in the computation of income taxes of "[l]osses sustained during the taxable year not compensated by insurance or otherwise," and Treasury regulations providing that losses deducted "must usually be evidenced by closed or completed transactions," but specifically authorizing deduction of worthless debts and corporate stock, the American creditor, and owner of the stock, of a corporation in Germany was entitled to deduct the entire amount of such investment from gross income when the assets and business of the corporation were sequestered by the German government during the war. P. 400.

2. Such sequestration of enemy property was within the rights of the German government as a belligerent power, and, when effected, left the corporation without right to demand its release or compensation for its seizure, at least until the declaration of peace. P. 402.

3. The transaction -- the sequestration -- causing the loss was "closed and completed " when the seizure was made, and the loss was then deductible, although later the German government bound itself to repay and an award was made by the Mixed Claims Commission which may result in recovery. P. 403.

61 Ct.Cls. 143 affirmed.

Certiorari (271 U.S. 651) to a judgment of the Court of Claims allowing a recovery of income taxes paid for the year 1918.