Court Opinion

ID: 8886113
Source: CourtListenerOpinion
Date Created: 2022-11-26 21:54:40.525146+00
Date Added: 2024-06-11T17:06:55.561668
License: Public Domain

ATWELL, District Judge.
I think we will have to start from taw. The Income Tax law was directed at income. It was not directed against bookkeeping entries either for or against the taxpayer, or, for or against the government.
Several niceties have been presented here by learned counsel, growing out of the practice of each side with reference to this particular gross aggregate and the yearly accruals beginning in the year 1919 and extending through the year 1939, which resulted in the aggregate of the last year.
*411So far as I have been able to understand from the stipulation of the parties, which I find to be the facts of this case, the taxpayer did not sell the cases, nor the bottles, to its customers, but it did take from those customers commensurate deposits on the bottles and cases so as to save it from waste or loss in the event those bottles or cases, as the case might be, were not returned to it. The time of such return was immaterial. ' The buyer could substitute other bottles for those bottles, or, if some other person brought in bottles, the taxpayer would take such bottles and use them as against some bottles that were not brought back by the customers. I see nothing in the stipulation that required the taxpayer to put the bottles which it might accumulate from others than its customers, in identical cases that it had sold to some particular customer. I doubt seriously that a pure legal question of bailment could be supported by such facts. Such facts, however, do support the theory that the taxpayer was setting aside and not subjecting itself to income tax liability on this growing sum of money which seems to have been advantaged each year by itself, or certainly was advantaged by itself in the year 1940.
I cannot share, and I do not think the court is required to share, in the thought that the Commissioner, or the Collector, is required to restrict any government taxing right to the investigation of the taxpayer’s methods. The very statement of the thought raises such a tremendous duty on the part of the government that it precludes an exhaustive investigation which that duty would require.
The taxpayer did enjoy an advantage in its annual returns by reason of the method that it had adopted and it enjoyed a large advantage ultimately and finally when it put all of those funds you might say, in its pocket, or, rather into its capital fund, showing its determination at that moment whatever the transactions may have been called, to declare the matter settled.
I believe, gentlemen, that it is a safer course, in the confusing circumstances, to deny the taxpayer a recovery here. It certainly ultimately and finally made income. It certainly and finally ought to pay on that income. What I have said includes, of course, the statement that the facts are as stipulated by the parties, and these observations, quite rough, are as a conclusion, or conclusions of law, and you will prepare your judgment, Mr. Reynolds, to be O. K.’d by Mr. Nelson and his associates, as to form, saving such exceptions as they may wish.