Case ID: bta_8/html/0368-01.html
Source: Caselaw Access Project
Author: {"author": "Littleton:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mobile River Saw Mill Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 8700.
    Promulgated September 29, 1927.
    Petitioner’s closing inventory of lumber on band determined.
    
      George E. H. Goodner, Esq., for the petitioner.
    
      J. L. Deveney, Esq., for the respondent.
    Proceeding for the redetermination of a deficiency of $4,569.11 for 1920. The issues are: (1) Respondent erred in increasing the inventory at the close of the year by $11,843.88, resulting in a corresponding increase in net income; and (2) respondent decreased invested capital by $1,622,03 on account of income and profits taxes for 1919. 
      No evidence was submitted in support of the material averments of the petition. Such findings of fact as we are enabled to make are based upon the pleadings and the admissions of the parties at the hearing.
    FINDINGS OF FACT.
    Petitioner, an Alabama corporation with its principal office at Mount Vernon, is engaged in the manufacture and sale of hardwood lumber.
    In its return for 1920, petitioner reported a closing inventory of 4,790,778 feet of lumber of the value of $106,594.81. Respondent determined the value of the inventory to be $118,438.69, based upon 5,323,087 feet and a market value of $22.50 per thousand feet, and, accordingly, increased net income by $11,843.88. The total quantity of lumber on hand at the close of the year was 4,790,778 feet. Respondent reduced petitioner’s invested capital by $1,622.03, on account of income and profits taxes for 1919 prorated from the dates the several installments became due.
   OPINION.

Littleton:

Petitioner raises no issue with respect to the market price of $22.50 per thousand feet fixed by the respondent in the deficiency notice for the purpose of valuing the inventory at the close of 1920. At the hearing, respondent conceded that the total quantity of inventoriable lumber on hand was 4,790,778 feet, instead of 5,323,087 feet shown in the deficiency notice. Based upon a total quantity of 4,790,778 feet, and a market price of $22.50 per thousand feet, the value of petitioner’s closing inventory for 1920 is $107,792.51, rather than $118,438.69 shown in the deficiency notice.

Respondent’s reduction of invested capital for 1920 by $1,622.03 on account of 1939 income and profits taxes is in accordance with the provisions of section 1207 of the Revenue Act of 1926, and, therefore, correct.

Judgment will be entered on 15 days’ notice, under Rule 50.

Considered by Smith and Love.