Bump Confectionery Co. v. Commissioner
United States Board of Tax Appeals
A liability to respond in damages for breach of contract occurring in 1920, which taxpayer does not admit to the injured party and does not accrue on its books, is not a proper deduction for the taxable year in which the breach occurred.
1Opinion of the Court
*51OPINION.
Arundell:
The petitioner urges its right to take as a deduction in its income-tax return for 1920 the amount of damages incurred by breaching its contracts with the American Sugar Refining Co. That the contracts were breached in 1920 is unquestioned. The petitioner could not accept delivery of the shipments and remain solvent, and it therefore deliberately chose to break its contracts, knowing full well that to do so would make it liable in damages for the breach. It did not, however, during the taxable year, admit its liability to the consignor, or enter on its books an estimate of…
2Cases cited1 opinion
- United States v. AndersonSupreme Court of the United States · 1926
3Cited by10 opinions
- General Communication Co. v. CommissionerUnited States Tax Court · 1960
- Bump Confectionery Co. v. CommissionerUnited States Board of Tax Appeals · 1926
- Cannon Valley Milling Co. v. CommissionerUnited States Board of Tax Appeals · 1941
- General Communication Co. v. CommissionerUnited States Tax Court · 1960
- General Communication Co. v. CommissionerUnited States Tax Court · 1960
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