327 F2d 986 United States v. Barnes

327 F.2d 986

UNITED STATES of America, Appellant,
Ferguson BARNES and Esther Barnes, Appellees.

No. 20475.

United States Court of Appeals Fifth Circuit.

February 17, 1964.

Burton Berkley, Atty., Tax Div., Dept. of Justice, Washington, D. C., Donald C. Lehman, Asst. U. S. Atty., Jacksonville, Fla., Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Atty., Tax Div., Dept. of Justice, Washington, D. C., Edith House, Asst. U. S. Atty., Miami, Fla., Robert N. Anderson, William Friedlander, Attys., Tax Div., Dept. of Justice, Washington, D. C., Edward F. Boardman, U. S. Atty., of counsel, for appellant.

John W. Mooers and Hugh R. Dowling, Jacksonville, Fla., for appellee.

Before TUTTLE, Chief Judge, and PHILLIPS** and JONES, Circuit Judges.


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This is an appeal by the Government from a judgment based on a jury verdict in a taxpayer's suit for refund. The sole issue in the case is whether loans and advances made by the taxpayer to his controlled corporation, which became worthless claims in his hands on the corporation's insolvency, can be deducted as a worthless debt incurred in the taxpayer's trade or business. The undisputed facts required a directed verdict in favor of the United States. They "showed no more than a loss by an investor in a corporation resulting from a transaction entered into to bring profit to the corporation, and thereby to its stockholders", United States v. Byck, (5 Cir.) 325 F.2d 551, December 20, 1963. See Whipple v. Commissioner, 373 U.S. 193, 83 S.Ct. 1168, 10 L.Ed.2d 288.


The judgment is reversed and the case is remanded for the entry of a judgment for the United States.



Of the Tenth Circuit, sitting by designation