Charles Evans Hughes

“ The latter accepted conditionally certain assets of the Atlantic Bank called 'A' assets, and certain other assets, called 'B' assets, were pledged to that Bank with authority to charge against them any losses which might be established in realizing upon the 'A' assets. Respondent and three other stockholders of the Atlantic Bank executed an agreement of guaranty, to the effect that if the North Carolina Bank failed to realize a certain sum from the 'A' assets within two years they would make up the deficiency in an amount not exceeding $500,000. ”

“ It was given to secure respondent's promise to pay, and if that promise to pay was not sufficient to warrant the deduction until the promise was made good by actual payment, the giving of security for performance did not transform the promise into the payment required to constitute a deductible loss in the taxable year. ”