The opinion
Smith,
dissenting: I can not agree with the result reached in the majority opinion that the bad debt deduction of $694,421.27 claimed by the petitioner in 1935 is not a legal deduction from gross income. The basis for the disallowance is that no debtor-creditor relationship existed between petitioner, Corn Exchange, and Union in respect of the account in which the charge-off was made. Of course, the existence of a valid enforceable debt is essential to a bad debt deduction. It is my opinion that the account which petitioner carried in its books in 1934 and 1935 as an account receivable from “Union Bank and Trust Company, in Liquidation” and against which petitioner charged off the respective amounts of $750,479.15 and $694,421.27 in those years, at the direction of the national bank examiner, constituted a valid debt. The charge-off made in the taxable year 1935, I think, was fully justified, since it was ordered by the national bank examiner.