
    Simon Benson, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 4721.
    Promulgated November 23, 1927.
    
      Arthur F. Jones, O. P. A., for the petitioner.
    
      Shelby S. Fmilkner, Esq., for the respondent.
   OPINION.

Arundell:

The petitioner is willing to have us decide the issue upon his admission that no legal consideration was paid for the note and that it was intended as a gift.

The courts have held that a promissory note given ’ without a valuable consideration is a mere promise to make a gift in the future. Williams v. Forbes, 114 Ill. 167; 28 N. E. 463; Wisler v. Tomb, 169 Cal. 382; 146 Pac. 876. The promise to pay interest was made concurrently with the promise to pay the principal sum and is nothing more than a promise to make a future gift.

The taxpayer fulfilled his promises, in part, during 1921 by making an interest payment of $600 which the payee accepted. This payment, and the acceptance thereof, was the real gift.

We are unable to agree with the contention of the taxpayer that the item is deductible as interest on an indebtedness.

Bouvier defines indebtedness as “ The state of being in debt, without regard to the ability or inability of the party to pay the same. But to create an indebtedness there must be an actual liability to pay at the time, either to pay then or at a future time.” The term is defined by Anderson in his law dictionary as “ the condition of owing money; also the amount owed.” In its general sense it is defined to be that which is due from one person to another, whether money, goods or services; that which a person is bound to pay or perform to another. 5 Am. and Eng. Enc. of Law, 143. Being indebted. is synonymous with owing. Van Winkle v. Ketcham (N. Y.), 3 Caines 323. An indebtedness is the owing of a sum of money on a contract. Roelofsen v. Hatch, 3 Mich. 277.

None of these or other definitions, or the judicial decisions examined by us support the theory that an executory gift, which is not a contract and which the donee can not enforce, either in law or in equity, against the donor, and the donor may revoke at any time before it is perfected, creates the relationship of debtor and creditor.

Reviewed by the Board.

Judgment will be entered for the resfondent.,

GREEN dissents.  