David Schwartz Co. v. Commissioner , 1 B.T.A. 971 ( 1925 )

Appeal of DAVID SCHWARTZ CO., INC.

David Schwartz Co. v. Commissioner

Docket No. 1679.

United States Board of Tax Appeals

1 B.T.A. 971; 1925 BTA LEXIS 2738;

April 7, 1925, decided Submitted March 26, 1925.

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David Schwartz, president of the taxpayer company, for the taxpayer.

Edward C. Lake, Esq., for the Commissioner.

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Before GRAUPNER, LANSDON, and LITTLETON.

This is an appeal from a determination by the Commissioner of a deficiency of $343.69 in income tax for the calendar year 1919. Only a part of this amount is in controversy. The amount here involved is that portion of the deficiency resulting from the Commissioner's disallowance of a deduction of $1,000 included in an amount claimed in the taxpayer's income-tax return as a charitable contribution but now asserted as an ordinary and necessary expense. This deduction being questioned by the Commissioner, it was contended by the taxpayer that the sum of $1,000 represented an amount advanced to a firm in Roumania for the purpose of opening a branch of the taxpayer company in that country, and that, owing to the fact that this amount was listed in the cash book immediately following an item of $1 designated "charity," the taxpayer's bookkeeper, in preparing the 1919 income-tax return, erroneously included the $1,000 so advanced under the heading of "charity." From the documentary evidence and oral testimony of the president of the taxpayer company at the hearing of the appeal, the Board makes the following

FINDINGS OF FACT.

1. The taxpayer is a New York corporation, engaged in the cotton converting business, with its principal office at 105 Franklin Street, New York, N.Y.

2. In 1919, the taxpayer entered into negotiations with the firm of Froim Schwartz in Roumania, through the representative of the firm in this country, with the intention of opening a branch office in that country and having Froim Schwartz as its representative there. In furtherance of the agreement entered into, the taxpayer in October, 1919, advanced to Froim Schwartz $1,000, for the purpose of opening and equipping a branch office in Roumania. In 1920 the president of the taxpayer company went to Roumania in connection with the branch office of his company there and, after an investigation, deemed it inadvisable to continue business relations with the Roumanian firm and in consequence severed the relations. The $1,000 advanced had been expended by the Roumanian firm in opening and equipping a branch office of David Schwartz Co., Inc.

DECISION.

The determination of the Commissioner is approved.