Pullman Trust & Savings Bank, an Illinois Corporation, Plaintiff-appellee, v. United States of America, Defendant-appellant, 338 F.2d 666 (7th Cir. 1964)

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US Court of Appeals for the Seventh Circuit - 338 F.2d 666 (7th Cir. 1964) December 3, 1964

Appeal from the judgment of the United States District Court for the Northern District of Illinois; Hubert Will, Judge.

Louis F. Oberdorfer, Asst. Atty. Gen., Tax Division, John B. Jones, Jr., Atty., Dept. of Justice, Washington, D. C., Edward V. Hanrahan, U. S. Atty., Chicago, Ill., Lee A. Jackson, Harry Baum, Alec. A. Pandaleon, Attys., Dept. of Justice, Washington, D. C., of counsel, for appellant.

Don S. Harnack, Arthur Dixon, Lorentz B. Knouff, Dixon, Todhunter, Knouff, & Holmes, Chicago, Ill., for appellee.

Before HASTINGS, Chief Judge, and KNOCH and SWYGERT, Circuit Judges.


This is an action brought by Pullman Trust & Savings Bank (Chicago, Illinois), appellee, against United States of America, appellant, for the recovery of certain corporate income taxes paid by the bank for the taxable years 1955 and 1956.

The Commissioner of Internal Revenue had determined deficiencies based upon the disallowance of deductions claimed for additions to the bank's bad debt reserve in those years. The bank paid the deficiencies assessed, with interest, and instituted this action for refund.

The bank's claims for recovery were based upon its assertion that its original determinations of allowable bad debt deductions were correct and in accordance with the procedure set forth in the Commissioner's Mimeograph 6209, 1947-2 Cum.Bull. 26, as supplemented by Rev. Rul. 54-148, 1954-1 Cum.Bull. 60.

After a full trial to the court, it held the bank had properly applied Mim. 6209, as supplemented, in determining its loss experience for the period 1928 through 1947. The district court further held, in the alternative, the Commissioner abused the discretion conferred upon him under Section 166(c) of the Internal Revenue Code of 1954 in disallowing the bank's claimed additions to its reserve for bad debts in each of the years 1955 and 1956.

Judgment in favor of the bank was entered on October 30, 1963 in the total sum of $231,709.80, plus statutory interest. From this judgment, the United States has appealed.

In arriving at its decision, the district court, Honorable Hubert L. Will presiding, made twenty-nine findings of fact, entered nine conclusions of law and supported its judgment with an able memorandum opinion. Such findings, conclusions and memorandum were first reported in 12 Am.Fed.Tax R.2d 5788 (N.D. Ill.) and are now being reported in 235 F. Supp. 317 (N.D. Ill.) .

Judge Will has prepared a comprehensive review of the facts and applicable law and we find ourselves in accord with his decision. A separate summary thereof by this court would serve no useful purpose and we adopt Judge Will's opinion as the opinion of this court. On such authority, we affirm the judgment appealed from in this cause.