Rev. Rul. 57-189

In 1951, a taxpayer on the accrual basis correctly accrued income for services rendered to several committees of a political party. In 1952, section 23(k)(6) was added to Internal Revenue Code of 1939 by Public Law 471, 66 Stat. 467, C.B. 1952-2, 357. That section provides, in part, that a bad debt deduction for taxpayers other than banks was unallowable with respect to debts owed by political parties, or branches thereof, for taxable years beginning after December 31, 1951. Section 271 of the Internal Revenue Code of 1954 corresponds to section 23(k)(6) of the Internal Revenue Code of 1939 in not allowing taxpayers other than banks a deduction for bad debts or worthless securities by reason of the worthlessness of any debt owed by a political party. The taxpayer received a number of payments on the accounts over a period of time, but after diligent efforts were made to secure payment of the balances due, there appeared no reasonable likelihood of his collecting any further payments on these accounts after 1955. Held , the accounts receivable held by the taxpayer, which represent worthless debts owed by the political party, are not deductible as bad debts.