The taxpayer, who was a lawyer, organized and, with some friends, funded a U.S. corporation for the purpose of developing and promoting a series of prototypes of a car. A loss which the taxpayer's sustained when this venture failed and advances which he had made to the corporation (after the other shareholders has refused to put in any other money) became unrecoverable was found to be fully deductible by him given that the venture itself clearly was a speculative adventure and any gain which would have been realized by him from disposing of his investment in the corporation would have been taxable on income account. Pigeon J. stated (p. 5281):
"Fairness to the taxpayers requires us to be very careful to avoid allowing profits to be taxed as income but losses treated as on account of capital and therefore not deductible from income when the situation is essentially the same."