Court Opinion

ID: 4610180
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:46:19.158093+00
Date Added: 2024-06-11T07:54:00.962063
License: Public Domain

G. F. STROTHER LUMBER CO. (LOVELACE-EUBANKS LUMBER CO.), PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.G. F. Strother Lumber Co. v. CommissionerDocket No. 15235.United States Board of Tax Appeals10 B.T.A. 1174; 1928 BTA LEXIS 3937; March 6, 1928, Promulgated 1928 BTA LEXIS 3937">*3937  1.  The amount allowable as a deduction for depletion determined.  2.  Held, that petitioner is entitled to include as a part of the cost of goods sold an amount representing the purchase price of certain lumber.  Victor Markwalter, C.P.A., and R. S. Cohen, Esq., for the petitioner.  Leroy L. Hight, Esq., for the respondent.  TRAMMELL10 B.T.A. 1174">*1174  This is a proceeding for the redetermination of a deficiency of $1,391.50 for 1921.  The deficiency results in part from the respondent having reduced the amount deducted by the petitioner in it return as depletion from $8,455 to $6,056.98.  FINDINGS OF FACT.  The petitioner is a Georgia corporation with its principal office at Washington.  The petitioner's name has been changed by the authority of the Superior Court of Wilkes County, Ga., to Lovelace-Eubanks Lumber Co.  During the year 1921 the petitioner purchased from the T. B. Lovelace Lumber Co. 13 carloads of lumber, containing a total of 208,000 feet, at a price of $11.50 per thousand, or a total of $2,392.  The lumber was received by the petitioner and placed in its stock in 1921.  Although the invoice for this lumber was received in1928 BTA LEXIS 3937">*3938  1921, through the oversight of the secretary of the petitioner corporation, who kept the books, the amount thereof was not entered upon the petitioner's books in 1921 or considered in determining the cost of goods sold in that year.  It was not until 1925 or 1926 when the books of the two companies were being audited that the oversight was discovered.  At the time the oversight was discovered a charge against surplus was made in the petitioner's books.  This lumber was paid for in 1925 or 1926.  With respect to the amount of timber cut and the amount deductible by the petitioner as a depletion allowance, the following stipulation was entered into by the parties: "The amount of timber cut in 1921 amounted to 4,143,520 feet, and the unit of depletion was $2.06 per thousand feet, the computation of depletion thus being $8,529.18." 10 B.T.A. 1174">*1175  OPINION.  TRAMMELL: The only issues involved in this proceeding are, first, that the respondent in his determination of the proposed deficiency allowed an insufficient amount for depletion, and, second, that the petitioner is entitled to include as cost of goods sold as amount representing lumber purchased in 1921 which through oversight of1928 BTA LEXIS 3937">*3939  the person keeping the books was not entered on petitioner's books in that year and not included in its cost of goods sold for that year.  The parties have stipulated that the depletion sustained by the petitioner was $8,529.18, and that amount should be deducted in recomputing the deficiency.  With reference to the other issue, the evidence shows that in 1921 the petitioner purchased lumber in the amount of $2,392.  The invoice for this lumber as well as the lumber was received in 1921.  but through oversight the cost thereof was not entered on the petitioner's books in that year.  The amount should be included in determining the cost of goods sold in 1921.  Judgment will be entered on 10 days' notice, under Rule 50.