Court Opinion

ID: 4629921
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:06:24.413982+00
Date Added: 2024-06-11T07:57:27.246130
License: Public Domain

SPRING BROOK ICE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Spring Brook Ice Co. v. CommissionerDocket No. 12862.United States Board of Tax Appeals12 B.T.A. 433; 1928 BTA LEXIS 3545; June 6, 1928, Promulgated *3545  The amount of the opening inventory for 1920 determined.  Edward C. Wuttkey, Esq., and Clarence L. Johnson, Esq., for the petitioner.  Joseph B. Harlacher, Esq., for the respondent.  TRAMMELL*433  This is a proceeding for the redetermination of a deficiency in income and profits tax for 1920 in the amount of $2,186.29.  The deficiency arises from the action of the Commissioner in determining income for 1920 by the use of a closing inventory without an opening inventory.  FINDINGS OF FACT.  The petitioner is a corporation organized under the laws of Connecticut, having its principal place of business in Hartford.  It is engaged in the harvesting and sale of natural ice and in connection therewith operated a farm.  The company was engaged in business prior to 1920 as well as during that year.  During 1920 and prior thereto the petitioner did not use inventories in the determination of its taxable income.  In 1921 the petitioner began the use of inventories for the first time and took an inventory as of January 1, 1921, for its opening inventory in the determination of its 1921 tax liability.  The respondent having determined that the use*3546  of inventories was proper in the determination of the petitioner's income for 1920, adopted the petitioner's opening inventory for 1921 as being the closing inventory for 1920, but did not give the petitioner credit for having any inventory whatever as of January 1, 1920.  In other words, the respondent used a closing inventory but no opening inventory, upon the ground that the petitioner had not established what its opening inventory for 1920 was.  *434  The closing inventory for 1920 as used by the respondent was $11,917.28 which did not exceed the opening inventory more than 20 per cent.  This resulted in the increase of income to the petitioner to that extent.  OPINION.  TRAMMELL: From all the evidence introduced we are convinced that the petitioner had on hand at the beginning of 1920 the same character of goods, materials and supplies that it had on hand at the end of 1920 and that the closing inventory for 1920 did not exceed the opening inventory for that year to an extent greater than 20 per cent.  This would make the opening inventory for 1920, $9,533.83, and we so find.  We do not consider that it is necessary to decide whether certain items which were included*3547  in the closing inventory for 1920 were properly included in the inventory as substantially the same situation existed at the beginning of the year as existed at the end of the year.  The assets, goods and supplies at the end of the year not exceeding those at the beginning of the year to an extent greater than 20 per cent, it would not affect the tax liability by omitting certain items in the closing inventory and omitting the same items in the opening inventory.  Judgment will be entered under Rule 50.