Deduction of a loan as commercially justified

Facts

The appellant [A.] operates a real estate agency as a self-employed activity. In 2015, he wrote off a loan to his father [B.] in the amount of CHF 506,215.65 with an effect on profit or loss. The cantonal tax authorities classified this write-off as not commercially justified and added the amount in the 2015 tax assessment decision. [A.] unsuccessfully filed an objection and appealed to the Tax Appeal Commission of the Canton of Valais, which also dismissed his appeal. [A.] then filed a public law appeal with the Federal Supreme Court. He requested that the judgment of the Tax Appeal Commission be set aside and that the cantonal tax authorities be instructed to assess him for the cantonal, municipal and direct federal taxes for 2015, 2016 and 2017 in accordance with his tax return.

Considerations

The Federal Supreme Court states that the appellant had granted the loan to his father from the operating assets of his sole proprietorship and had recorded it as business assets. The cantonal tax authorities had recognized this qualification over several years. The Federal Supreme Court sees no significant circumstances that would justify a reclassification of the loan as private assets. The death of the borrower does not automatically…