United States Supreme Court Cases & Opinions

U.S. Supreme Court

Welch v. Helvering, 290 U.S. 111 (1933)

Welch v. Helvering

No. 33

Argued October 19, 1933

Decided November 6, 1933

290 U.S. 111

Syllabus

1. What are "ordinary and necessary expenses" in carrying on a business, within the meaning of provisions of Revenue Acts allowing deductions of such expenses in computing net income, must be determined by conduct and forms of speech prevailing in the business world. P. 290 U. S. 113.

2. The Court cannot say, in the absence of proof and as a matter of judicial knowledge, that payments on the debts of a corporation, made by its former officer after its discharge in bankruptcy and for the purpose of strengthening his own business standing and credit were ordinary and necessary expenses of his business. P. 290 U. S. 115.

Page 290 U. S. 112

3. A finding by the Commissioner of Internal Revenue that such payments are not ordinary and necessary expenses of a taxpayer, and hence not deductible under the revenue acts and regulations in computing his net income, is presumptively correct. P. 290 U. S. 115.

63 F.2d 976 affirmed.

Certiorari, 289 U.S. 720, to review a judgment of the Circuit Court of Appeals which affirmed the action of the Board of Tax Appeals, 25 B.T.A. 117, disallowing certain deductions in an income tax return.