UNITED STATES DISTRICT COURT WESTERN DISTRICT OF PENNSYLVANIA
July 30, 1957
Frank R. S. KAPLAN, Beatrice B. Bramer, Cecil B. Mihaly and George C. Brown, Executors, Estate of S. Eugene Bramer, Deceased,
The UNITED STATES of America
The opinion of the court was delivered by: GOURLEY
This is an action for refund of income taxes in the amount of $ 70,000 for the year 1943, alleged to have been erroneously collected from plaintiffs' decedent.
The following questions are raised:
1. Whether a taxpayer reporting on the cash basis, who borrows money from a third person to pay his creditor a deductible debt, must take his deduction in the year the creditor was paid or in later years when the third party is paid.
2. Whether the doctrine of collateral estoppel precludes a judgment for taxpayers on their second cause of action by reason of judgment by the Tax Court and its affirmation by the United States Court of Appeals for the Third Circuit.
3. Whether a taxpayer reporting on the cash basis, who purchases stock on margin, pledging as collateral the purchased stock and stock of an associate, sustains a deductible loss in the year the collateral is sold and his indebtedness to the creditor is extinguished, or in later years when he partially reimburses the associate whose collateral was sold.
For purposes of brevity, the following abbreviations are employed:
S. Eugene Bramer -- Bramer -- Decedent
Hornblower & Weeks -- Hornblower
William K. Frank -- Frank
Copperweld Steel Co. -- Copperweld
National Steel Corp. -- National
Lee B. Foster -- Foster
Rustless Iron Corporation -- Rustless
Bank of Pittsburgh -- Bank
Weirton Steel Co. -- Weirton
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