Opinion · Court of Appeals for the Ninth Circuit

United States v. Lee Hoffman and Judy Hoffman, Husband and Wife

United States v. Lee Hoffman & Judy Hoffman, Husband & Wife, 423 F.2d 1217 (9th Cir. 1970)

Type
Opinion
Court
Court of Appeals for the Ninth Circuit
Jurisdiction
Federal
Date
1970-03-27
Topic
general

How later courts describe this case

  • relying on Stratmore v. Commissioner, 420 F. 2d 461 , 465 (3d Cir. 1970) , cert. denied 398 U.S. 951 (1970

Citator

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Cited by
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UNITED STATES v. HOFFMAN,423 F.2d 1217(9th Cir. 1970)
UNITED STATES of America, Appellant, v. Lee HOFFMAN and Judy Hoffman,
husband and wife, Appellees.
No. 22093.
United States Court of Appeals, Ninth Circuit.
March 27, 1970.
Page 1218
Grant T. Wiprud (argued), Asst. U.S. Atty., Sidney I. Lezak, U.S. Atty., Portland, Ore., Johnnie M. Walters, Asst. Atty. Gen., Dept. of Justice, K. Martin Worthy, Chief Counsel, I.R.C., Washington, D.C., for appellant.

James R. Moore (argued), of Mautz, Souther, Spaulding, Kinsey Williamson, Portland, Or., for appellees.
Before CHAMBERS, HAMLIN and ELY, Circuit Judges.
PER CURIAM:
Taxpayers sued the United States for recovery of income taxes paid for the years 1958-1961. They claimed losses arising from payments to a bonding company under an agreement by which the taxpayers agreed to indemnify the company for losses it sustained as guarantor of performance of construction contracts made by the taxpayers' family corporation. The issue on appeal is whether the indemnity payments were deductible as ordinary losses incurred in a transaction entered into for profit though not connected with taxpayers' trade or business within the provision of I.R.C. §165(c)(2). The Third Circuit in Stratmore v. United States,420 F.2d 461(Jan. 6, 1970) thoroughly considered this issue. Taxpayers in Stratmore suffered losses as guarantors of loans to their family corporation. That the Stratmore were guarantors and the Hoffmans were indemnitors is not a persuasive distinction between the two cases. In Stratmore the court found it unnecessary to probe the claimed similarity of the guarantee agreement to an indemnity agreement. Instead, the court examined economic reality and congressional purpose in arriving at its conclusion that the essence of Putnam v. Commissioner of Internal Revenue,352 U.S. 82, 77 S.Ct. 175, 1 L.Ed.2d 144 (1956) was to protect the statutory scheme for a common tax treatment of all losses suffered by a corporate stockholder in providing his corporation with financing. We agree with this approach.

Upon the basis of the result reached, and the reasoning contained in Stratmore v. United States,420 F.2d 461(3d Cir., 1970), the judgment appealed from is reversed.