Petition for Review of Decision of the United States Board of Tax Appeals.
Before SPARKS and MAJOR, Circuit Judges and LINDLEY, District Judge.
There is here presented for review a decision of the Board of Tax Appeals redeterming a deficiency in income tax against the petitioner for the calendar year 1928, in the amount of $49,007.48, plus a 50% penalty of $24,503.74, a total of $73,511.22.
Upon the hearing before the Board of Tax Appeals, the respondent conceded that in the absence of proof of fraud, the Statute of Limitations was a bar to any assessment.
During the year in question, petitioner claimed to be the owner of a large number of shares of stock of the Savold Tire Company and the New York Savold Tire Company, the former being a Delaware corporation and the latter appearing to be a subsidiary of the former. In 1928, petitioner claims to have sold to one, David Wiener, his brother-in-law, for the sum of $1,290.80, 12,908 shares of stock in these corporations, the larger portion of which was stock of the Savold Tire Company. A loss of $385,843.66 was claimed on this transaction and deducted from petitioner's gross income in his return filed for the year 1928. It is this deduction which respondent contends was fraudulent, and while other questions are discussed, this is the essential one around which the controversy revolves, a solution of which is determinative.
The circumstances concerning the alleged sale of stock in 1928 are, as related by petitioner, that he offered to sell the same to Wiener, who was a stock broker in New York City. An agreement was reached and the stock was mailed to Wiener, accompanied by the following letter:
"Mr. Dave Wiener, "C/o Wiener Bros., "148 Madison Ave., "New York, N.Y.
"I am sending you this stock under separate cover in accordance with my sale to you. This stock cost me a lot of money and, buying it at the price you are buying it, I hope you will make a good thing of it. Please send your check for $1290.80.
Wiener did not pay for the stock as agreed, but some three years later, he gave petitioner a note for money which he had borrowed at that time, and petitioner thought the alleged ...