
    YODER v. NAUTS, Collector of Internal Revenue.
    District Court, N. D. Ohio, W. D.
    October 3, 1928.
    No. 3363.
    Marshall, Meibom, Marlar & Martin, of Toledo, Ohio, for plaintiff.
    The United States Attorney, for defendant. .
   KILLITS, District Judge.

The facts of 'this case are not in substantial dispute. The plaintiff was a large distributor of the preferred and common stock of the Ohio Dairy Company, organized in 1919. He sold much of his preferred, guaranteeing to his assignees the dividends thereon. These dividends were paid out of capital, and were not earned. As an officer of the company, Mr. Yoder became personally responsible for these diversions, and thereby became its debt- or in. a large sum. This debt he recognized and liquidated by promissory notes during the tax year 1923. That these notes represented to him losses in business as of the date of ascertainment and payment there is no room for question, and that the amount of such losses was then deductible from income as of 1923 is equally clear.

In 1920, plaintiff guaranteed the National Dairy Company against certain losses anticipated as possible. This guaranty ripened into a liquidated indebtedness in 1921, met by delivery of plaintiff’s promissory notes, and became business losses to the taxpayer as and when the notes were paid. Respecting each of these matters, plaintiff should have been allowed the deductions he claimed. To hold otherwise would be to construe with nice technicality and most illiberally the applicable statutes, a practice which is condemned by all the precedents.

Plaintiff should have the judgment and decree for which he prays. We have signed plaintiff’s findings of faet, and will approve findings of law based on these conclusions.  