Court Opinion

ID: 9653969
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:00:29.912195+00
Date Added: 2024-06-11T18:13:04.123536
License: Public Domain

SWAN, Circuit Judge
(dissenting). In my opinion taxpayers who report upon an accrual basis are obliged to return as gross income interest earned during the year and accrued upon their books, and are permitted only such deductions from gross income as the revenue law specifies. Sections 233, 234, Revenue Act of 1918 (40 Stat. 1077). The *36interest which had accrued up to the appointment of the receiver was a debt owing to the bank, and it was neither ascertained to be worthless nor charged off during the year. Indeed, it was not in f aet worthless. The interest accrued before receivership was a provable claim and entitled to receive the same rate of dividend as the principal of the loan, whatever that might be. No one doubted that some substantial dividend would ultimately be paid. To allow a taxpayer reporting upon an accrual basis to appraise the debts which he has entered on his books as constituting accrued income, according to his opinion at the end of the year of the financial responsibility of the several debtors, returning some items at face value and others at a percentage of their face, while still others are omitted altogether as worthless, would be inconsistent with accounting principles, and is not, in my judgment, what Congress intended by authorizing the keeping of books and the making of returns on a basis other than that of actual receipts and disbursements. See United States v. Anderson, 269 U. S. 422, 46 S. Ct. 131, 70 L. Ed. 347. Accordingly, I think the judgment should be affirmed.