Case ID: bta_22/html/0732-01.html
Source: Caselaw Access Project
Author: {"author": "McMahon :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

C. Niss & Sons, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 47089.
    Promulgated March 13, 1931.
    
      Arthur A. Mueller, Esq., for the petitioner.
    
      F. B. Shearer, Esq., for the respondent.
   OPINION.

McMahon :

The action of the respondent in including the amounts of $8,727.36 and $38,439.63 in income of the petitioner for the year 1927 is the only thing the petitioner is questioning in this proceeding, the amounts themselves having been stipulated to be correct. Section 212 (d) of the Revenue Act of 1926 provides, in part:

Under regulations prescribed by the Commissioner with the approval of the Secretary, a person who regularly sells or otherwise disposes of personal property on the installment plan may return as income therefrom in any taxable year that proportion of the installment payments actually received in that year which the total profit realized or to be realized when the payment is completed, bears to the total contract price. * * *

Article 42 of Regulations 69, promulgated under the Revenue Act of 1926 provides, in part, as follows:

* * * No payments received in the taxable year shall be excluded in computing the amount of income to be returned on the ground that they were received under a sale the total profit from which was returned as income during a taxable year or years prior to the change by the taxpayer to the installment basis of returning income. * * *

We have heretofore held in a number of cases that when a taxpayer elects to change from the accrual method to the installment sales method of returning income, there must be included in the income of the year in which the change is made and of subsequent years a proper proportion of the installments received in these years upon sales made in prior years, regardless of whether the entire profit upon such sales has been reported in income for prior years. Blum’s, Inc., 7 B. T. A. 737; Warren Reilly, 7 B. T. A. 1327; J. B. Bradford, Piano Co., 15 B. T. A. 1045. Following those decisions we approve the action of the respondent in the instant proceeding.

Judgment will be entered for the respondent.