
    Ardis & Company, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 13023.
    Promulgated June 18, 1928.
    
      C. M. Pasguier, C. P. A., for the petitioner.
    
      J. F. Greaney, Esq., for the respondent.
   OPINION.

Arundell:

The evidence shows that at December 31, 1920, the maker of the notes was without resources of any kind out of which the amount charged off could have been collected and that he had financial obligations to meet aside from what he owed under the two mortgages on the farm. The value of the land was less than the amount of the first mortgage and it would have been a useless procedure for the petitioner to have instituted foreclosure proceedings under the second mortgage it held as security for the payment of the notes. The petitioner through its business relations with the debtor was fully aware of his insolvent financial condition and knew of no assets out of which judgment for the amount due could have been collected. The treasurer of the petitioner corporation testified that before the notes were charged off as worthless, the petitioner made every effort to collect them but without success. Nothing was paid on the notes prior to December 31, 1920, and no payments have been paid on them since then.

From all the evidence, it is our opinion that the notes were worthless at the time they were charged off as bad debts. The deduction was proper and the respondent is reversed.

Judgment mil be entered under Rule 50.  