Appeal of Cherry Basset Co.

[428] OPINION. Ivins: It appears from testimony of the taxpayer’s xvitnesses that it was the custom of the concern in regard to the collectibility of accounts to “never consider anything good if we felt doubtful about it,” and in charging off as bad debts the accounts involved in this appeal that custom would seem to be the determining factor. We are not convinced that the accounts involved were ascertained to be worthless, or that they were in fact worthless when charged off. The Board held in the Appeal of Steele Cotton Mill Co., 1 B. T. A. 299, that under the Revenue Act of 1918 part of a debt may not be charged off as worthless and a deduction taken therefor. This effectually disposes of the taxpayer’s contention relative to the $6,100 of the Sanitary Milk Products Co.’s account charged off. The entire account may not now be allowed as a deduction because it-was not properly charged off the taxpayer’s books at December 31, 1920, and because it does not appear to have been ascertained to be worthless at that time. On reference to the Board, Phillips concurs in the result only. Arundell not participating.