23 T.C. 1">*1 The Commissioner determined a deficiency in income tax for the year 1945 in the amount of $ 754.98. The question to be decided is whether petitioner is entitled to a loss deduction in 1945 under section 23 (e) of the Internal Revenue Code of 1939 by reason of alleged confiscation in 1945 by the Government of Yugoslavia of stock in a corporation organized under the laws of Yugoslavia. The petitioner claims that income tax for 1945 has been overpaid. The petitioner concedes that other adjustments which the Commissioner made are correct.

FINDINGS OF FACT.

The stipulated facts are found as stipulated. The stipulation is incorporated herein by this reference.

The petitioner was born in Yugoslavia. He left Yugoslavia in 1940 and he has not returned since his departure. He entered the United1954 U.S. Tax Ct. LEXIS 78">*80 States on June 3, 1941, under a permanent immigration visa, and he became a citizen of the United States in 1946. The petitioner has resided in New York City since June 30, 1941. His return for the taxable year, 1945, was filed with the collector of internal revenue for the third district of New York.

23 T.C. 1">*2 The Ris corporation was organized under the laws of Yugoslavia in about 1935. There were 3,000 shares of stock issued. In 1936 and 1938, petitioner purchased 2,850 shares. The total cost of the 2,850 shares was $ 28,500 in United States dollars based upon the official rate of exchange for dinars in 1936 and 1938. He was the manager of the corporation. Ris corporation carried on its business in Zagreb, Yugoslavia. Its business was the manufacture of rubber goods.

In April 1941, Yugoslavia was invaded by German military forces. At that time petitioner owned 2,850 shares of stock of Ris corporation.

War was declared by the United States against Germany on December 11, 1941.

The adjusted basis of petitioner's stock was $ 28,500 on December 11, 1941.

The city of Zagreb, Yugoslavia, was liberated from German occupation on March 15, 1945.

When petitioner left Yugoslavia in 1954 U.S. Tax Ct. LEXIS 78">*81 1940, he had all of his stock in Ris corporation transferred into the name of Ivo Mundorfer as his nominee, who remained in Yugoslavia, for the purpose of the safekeeping of the stock, in order to save it from confiscation. Petitioner is of the Jewish faith. Mundorfer is not of the Jewish faith. The stock was not confiscated by the enemy during the occupation of Yugoslavia; it was held by Mundorfer for petitioner, continuously, until the liberation of Yugoslavia during March of 1945.

In 1945, after the liberation of Yugoslavia, petitioner was represented by an attorney, Alexander Green, who was in Belgrade, Yugoslavia. Green went to the city of Zagreb in July of 1945, and made claim for petitioner to the board of directors of Ris corporation for recognition of petitioner's ownership of 2,850 shares of stock. He spoke to the managers of the plant which Ris corporation operated. He saw Mundorfer who still had possession of petitioner's stock certificates. He visited the plant. He inspected the books of the corporation.

Green attended a meeting of the board of directors of Ris corporation, as petitioner's proxy, on October 19, 1945. At this meeting the directors recognized petitioner's1954 U.S. Tax Ct. LEXIS 78">*82 ownership of stock in the corporation and recognized Green as petitioner's attorney and proxy.

Prior to October 19, 1945, Ris corporation, by letter dated August 2, 1945, to petitioner, confirmed petitioner's ownership of 2,850 shares of stock, the dates of his purchases of stock, and his cost (in dinars) of each purchase of stock.

Petitioner's sister-in-law, during July 1945, and after, resided in Yugoslavia in the town of Subotica, which is close to Belgrade. Ris corporation made cash payments to Green on two occasions for transmission to petitioner's sister-in-law. She received from the corporation, through Green, 50,000 dinars in October 1945, and 2,000 dinars 23 T.C. 1">*3 in November 1945. These payments were not dividends. They were charged to petitioner's capital account on the books of Ris corporation. Petitioner's sister-in-law attempted to obtain additional payments from the corporation after November 1945, but her requests were refused.

Petitioner did not lose his stock in Ris corporation, or his interest therein, in 1945.

OPINION.

1954 U.S. Tax Ct. LEXIS 78">*83 Petitioner's interest in his stock in Ris, a Yugoslav corporation, was deemed to have been destroyed or seized, pursuant to section 127 (a)(2) of the Internal Revenue Code of 1939, on December 11, 1941, when war was declared between the United States and Germany, whose forces then occupied Yugoslavia.

Petitioner contends that there was a recovery of his stock in 1945, brought about through his representative, Green, and that thereafter, in December of 1945, the Government of Yugoslavia, without compensation, confiscated his stock. Petitioner relies primarily upon Andrew P. Solt, 19 T.C. 183. Petitioner claims a loss deduction under section 23 (e) of the Internal Revenue Code of 1939 of the entire basis of his stock.

We are satisfied from the evidence that there was a recovery of the petitioner's interest in stock of Ris corporation in 1945 within the meaning of section 127 (c) through actions of Ris corporation which were brought about by Green acting for petitioner. The evidence in support of this conclusion is of about the same type and degree as in the Solt case, and, therefore, petitioner is entitled to a ruling in his favor on this point.

However, a determination that petitioner sustained a loss in 1945, after the recovery, is dependent upon a finding that there was a confiscation1954 U.S. Tax Ct. LEXIS 78">*84 of petitioner's stock in 1945. We do not have the proof of governmental confiscation in this case such as was present in the Solt case where it was established that there was a confiscation through the issuance of a governmental decree. The petitioner has failed to prove that his interest in Ris corporation was taken from him by an act or decree of the Yugoslav Government which was in power at the end of 1945.

Petitioner, through a witness, attempted to establish that he sustained loss of his property interest in 1945 as a result of governmental confiscation, but the witness upon whom petitioner relied failed to establish the necessary facts. He gave testimony of a general nature about the establishment of a provisional government in Yugoslavia after its liberation, and about the government's appointment of "commissars" in industrial enterprises. He also testified that a law of 23 T.C. 1">*4 nationalization of industrial property was not enacted until 1946, and he admitted, upon cross-examination, that in 1945 not all industrial properties were taken or confiscated by the Yugoslav Government.

Since there is not proof that Ris corporation was taken by act of the Yugoslav Government1954 U.S. Tax Ct. LEXIS 78">*85 in 1945 or that the Yugoslav Government in 1945 by decree or act deprived petitioner of his stock in Ris corporation, petitioner's claim for a loss deduction under section 23 (e) must be denied. Cf. Estate of Wladimir Von Dattan, 22 T.C. 850; Erwin de Reitzes-Marienwert, 21 T.C. 846; and Chess Lamberton, 5 T.C. 600.

Consideration has been given also to the applicability of United States v. S. S. White Dental Mfg. Co., 274 U.S. 398">274 U.S. 398, but petitioner's lack of proof of seizure of the Ris corporation stock deprives him of the support of the White Dental Mfg. Co. case.

The respondent's determination is sustained.

Decision will be entered for the respondent.