The opinion
Whitaker, Judge,
concurring in part and dissenting in part:
I think the plaintiff is entitled to deduct the difference between the purchase price of the stock of the Crown Cork & Seal Company and the price for which it was sold to Max Amberg.
*103 The majority opinion states that there was no consideration for the option given Amberg to purchase this stock at $10.00 a share.. This does not seem to me to be true. Am-berg had rendered services to the plaintiff in times past and it was desired that he should render services to it in the future in the way of publicizing the stock <of the Crown Cork & Seal Company, of which plaintiff was a heavy holder, and in boosting its value. This was the actual and I think a sufficient consideration for the option.
But whether or not the option was legally binding, plaintiff felt itself obliged to honor it in order to induce Amberg; to continue to boost the stock; in other words, it felt compelled to sell Amberg the stock for $10.00 a share and it-actually did so. Therefore, it is unquestionably out of pocket, the difference between what it paid for the stock and what it sold it for.
If a man enters into an unenforceable agreement to sell a piece of property at an agreed price and, although the market, for the property advances in the meantime, he nevertheless carries out his agreement merely as a matter of honor, he is bound to take the actual sale price as the basis in determining gain or loss.
Even though it properly can be said that plaintiff gave Amberg the difference between the market value of the stock and the price fixed in the option, I still think plaintiff is entitled to deduct the difference between the cost and, the price for which it actually sold the stock, because this, con-cededly, was done both for his past services in boosting the stock and to induce him to continue to do so. Plaintiff held a great deal of this stock and was constantly trading in it. Keeping up the value of the stock was a part of plaintiff’s business, which it thought it could promote by inducing Am-berg to continue to boost it. The transaction, therefore, might be viewed in the same light as gifts to customers and the expenses of entertaining them in order to retain their goodwill and business.
The Board of Tax Appeals (now The Tax Court) has held that both gifts to customers and the expenses of enter- *104 taming them are deductible. James F. Coleman, 3 B. T. A. 835; Adler Co. v. Commissioner, 10 B. T. A. 849; Flanagan v. Commissioner, 47 B. T. A. 782; Hartford Hat & Cap Co. v. Commissioner, 7 B. T. A. 714.
The Second Circuit Court of Appeals has held that entertainment expenses‘are deductible. Schmidlapp v. Commissioner, 96 F. (2d) 680; Blackmer v. Commissioner, 70 F. (2d) 255; Cohan v. Commissioner, 39 F. (2d) 540.
A taxpayer is entitled to deduct a bonus paid employees, not because the corporation was under the obligation to pay the bonus, but because it was done in order to improve the efficiency and productivity of employees. The sale to Am-berg at this low price was done for the same reason. Both the Commissioner’s regulations and the decisions of the Board of Tax Appeals recognize the right of the taxpayer to deduct bonuses to employees. Boericke & Runyon, 3 B. T. A. 684; Ferry Market, Inc. v. Commissioner, 5 B. T. A. 167; Ketcham v. Commissioner, 9 B. T. A. 1208; Liberty Hosiery Mills v. Commissioner, 31 B. T. A. 64; Guitar Trust Estate v. Commissioner, 34 B. T. A. 857; Regulations 103, sec. 19.23 (a)-8.
Although I think the taxpayer would have been entitled to the deduction as a business expense, it cannot recover on this ground in this case, since it did not base its claim for refund on this ground. Real Estate Land-Title & Trust Co. v. United States, 309 U. S. 13 . However, I am of the opinion that it can deduct it on the ground it asserted in its, claim for refund, to wit, as a loss.
I concur in the majority opinion on the deductibility of the , bad debt.
LittletoN, Judge, concurs in the foregoing opinion.
In accordance with the above opinion of the court, upon the filing of a stipulation by the parties showing the amount due thereunder to be $18,932.62, with interest as provided by law, and upon plaintiff’s motion for judgment, it was ordered October 2,1944, that judgment be entered for the plaintiff in the sum of $18,932.62, with interest as provided by law.