
    National City Bank, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 8928.
    Promulgated April 19, 1928.
    
      Justin D. Bower sock, Esq., for the petitioner.
    
      P. M. Clark, Esq., for the respondent.
   OPINION.

Lansdon :

The petitioner claims the right to deduct from its gross income for the taxable period the amounts of $11,500 and $37,315.92, representing notes ascertained to be worthless as losses sustained in such period. It makes as alternative contentions in respect thereof: First, that the total of these amounts was a loss sustained, or, second, that the notes were ascertained to be worthless, and charged off in the taxable period, in effect, by the closing of its books on May 81, 1919.

Petitioner’s counsel argues that as a bank is engaged in dealing in money and securities, a loss occurs whenever an uncollectible loan is made and not at _ the date when the note evidencing such loan is ascertained to be uncollectible. We do not agree with this contention. When a bank loans money on a note, a debt is created, and any loss sustained therefrom is of the date when such debt is ascertained to be worthless.

The evidence in support of the petitioner’s alternative contentions is not convincing. All the notes in question were included in the petitioner’s assets as of May 31, 1919. There is no.evidence as to when any of these notes were made or due or whether any part of them was known to be worthless at the elate of the merger. There is ample evidence that all such notes were later ascertained to be worthless; but that fact does not establish worthlessness at May 31, 1919. The law provides not only that worthlessness must be ascertained, but that .a charge-off must be made in the taxable year or period. The petitioner concedes that no charge-off as worthless was made on its books in the taxable period, but contends that the closing of its books on the transfer of its assets to tire Fidelity National Bank & Trust Co. and to trustees complies with this statutory provision. Even if this contention was admitted as proved, it is not material, since the record shows that the notes were not ascertained to be worthless at May 31, 1919.

Reviewed by the Board.

Judgment will be entered for the respondent.  