Welch.docx - 9771 Citation Thomas H Welch v Helvering 290...

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9771 Citation: Thomas H. Welch v. Helvering, 290 U.S. 111 (1933) Facts: Thomas Welch (Welch) was the secretary for a Minnesota grain company, E. L. Welch Company. E. L. Welch Company went bankrupt and was forgiven of the company’s debts. After the bankruptcy, Welch went into contract with Kellogg Company, also in the grain business. The contract allowed Welch to be a purchase grain for Kellogg Co. on a commission. Welch attempted to re-establish relation’s with customers he encountered while he was employed by E. L. Welch by paying the Welch Co. debts. The debt payments took place during 1924 to 1928, included. Welch deducted the payment amounts as business expenses in the years the payments occurred. Issue: Are payments by a taxpayer made to the creditors of a bankrupt corporation to

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