Purchase tax provision treated as accrued debt and allowed as a deduction in net wealth computation.

A proportionate provision for purchase tax liability was treated as an existing, accrued liability rather than a contingent claim, because the obligation arose when the purchases were made. In computing net wealth under section 2(m) of the Wealth-tax Act, only amounts that are not debts owed on the valuation date are excluded. Applying the distinction between contingent liability and a perfected debt, the provision was regarded as a liability in praesenti and the partners' proportionate share was held deductible in determining net wealth.

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Issues: Whether the proportionate provision made for purchase tax liability by a partner in computing net wealth under the Wealth-tax Act was deductible as a debt owed on the valuation date.

Analysis: The liability for purchase tax was treated as arising when the purchases were effected, and the provision made against that liability was held to be an existing and accrued liability. Net wealth under section 2(m) of the Wealth-tax Act excludes only what is not a debt owed on the valuation date. The reasoning applied the settled distinction between a contingent liability and a perfected debt, and treated the purchase tax provision as a liability in praesenti. On that basis, the proportionate share of the provision in the hands of the partners was held deductible in computing net wealth.

Conclusion: The proportionate provision for purchase tax was a debt owed and was deductible in computing the partners' net wealth.

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