Court Opinion

ID: 4478167
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:54.910101+00
Date Added: 2024-06-11T15:03:31.030635
License: Public Domain

Smith, J., concurring: I concur in the result reached by the Tax Court in this case upon the authority of Musselman Hub-Brake Co. v. Commissioner, 139 Fed. (2d) 65, and Celina Mfg. Co. v. Commissioner (C. C. A., 6th Cir..), 142 Fed. (2d) 142 Fed. (2d) 449. In the opinion of the Court it is held that the two Flynn brothers are taxable in 1939 and 1940 upon the salaries accrued upon the petitioner’s books of account for those years which were not actually paid to them during those years. This is upon the doctrine of constructive receipt, which, I think, has no application to this case. The accrued salaries were paid to the Flynn brothers in the form of notes and checks which the Flynn brothers treated as the equivalent of cash and reported the same as a part of their taxable income for the years 1940 and 1941, respectively. The payments by note and by check within two and one-half- months after the close of the calendar years 1939 and 1940 were payments, upon the authority of the above cited cases, under section 24 (c) (1) of the Internal Revenue Code. In my opinion the Court is in error in saying that section 24 (c) (2) may not be interposed to disallow to petitioner the deduction of the accrued salaries. I think it is not to be doubted that section 24 (c) (1) was intended to apply to cases such as this. Opper, J., agrees with the above.