Case ID: bta_9/html/0126-01.html
Source: Caselaw Access Project
Author: {"author": "Love:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Lyon & Billard Co., Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 7486, 11380.
    Promulgated November 15, 1927.
    
      W. L. Harrison, Esq., and Reuben Pollowitz, O. P. A., for the petitioner.
    
      A. R. Marrs, Esq., for the respondent.
   OPINION.

Love:

We have not jurisdiction to redetermine petitioner’s tax liability for the year 1919, since no deficiency was determined for that year. Revenue Act of 1926, section 274 (g); Appeal of Cornelius Cotton Mills, 4 B. T. A. 255.

It was petitioner’s practice once a year to turn over to its attorney for collection all overdue and doubtful accounts. At the same time, the amounts would be charged off the books, and would be deducted from income in its income-tax returns as bad debts. When the debts thus charged off were collected, petitioner included them in income. The evidence shows that many of them were collected within a few days after being placed in the hands of its attorney, and we are satisfied that worthlessness had not been ascertained when the deductions were made. The Commissioner disallowed such deductions in 1921. The petitioner now seeks to have the deductions similarly made in the years 1918 and 1920 restored to income, and the sums collected in those years, which had been erroneously deducted in other years under the practice described, excluded from income in 1918 and 1920, respectively. The latter are the only years before us. We think the facts which we have found are clearly established by the evidence, and that the petitioner is entitled to have the adjustment which it asks made in the years in question.

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

Considered by Teussell, Smith, and Littleton.