Federated Dep't Stores, Inc. v. Commissioner
United States Tax Court
On Feb. 1, 1964, F, a retail department store chain, sold its installment accounts receivables to FNB, a bank. The accounts contained service or carrying charges which F had not previously recognized as income. In exchange, FNB gave F cash in the amount of approximately 88 percent of the notes, and retained 10 percent as a contract reserve against which any defaults would be charged.
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On Feb. 1, 1964, F, a retail department store chain, sold its installment accounts receivables to FNB, a bank. The accounts contained service or carrying charges which F had not previously recognized as income. In exchange, FNB gave F cash in the amount of approximately 88 percent of the notes, and retained 10 percent as a contract reserve against which any defaults would be charged. Upon collection of the accounts, the contract reserve was to be reduced and paid over to F in such an amount so that the reserve did not exceed 10 percent of uncollected accounts. Held, even though the contract…
1Opinion of the Court
OPINION
Tietjens, Judge:
Tbe Commissioner determined deficiencies in income tax for the taxable years ending February 2, 1963, and February 1, 1964, in tbe amounts of $302,761.83 and $1,940,544.91, respectively.
The only issues remaining for our decision are:(1) Whether, at the time petitioner sold its accounts receivable to a bant, it must recognize as income, previously unrecognized service charges included in the sold accounts;(2) If so, whether the recognition at the time of the sale constitutes a change of accounting method instituted by the Commissioner under section 481,I.R.C. 1954;1…
2Cases cited19 opinions
- Commissioner v. Glenshaw Glass Co.Supreme Court of the United States · 1955
- Commissioner v. HansenSupreme Court of the United States · 1959
- Edwards v. Cuba RailroadSupreme Court of the United States · 1925
- Brown Shoe Co. v. CommissionerSupreme Court of the United States · 1950
- Great Northern Ry. Co. v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1930
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3Cited by22 opinions
- Johnson v. CommissionerUnited States Tax Court · 1997
- G.M. Trading Corp. v. CommissionerCourt of Appeals for the Fifth Circuit · 1997
- Berger v. CommissionerUnited States Tax Court · 1996
- G.M. Trading Corp. v. CommissionerUnited States Tax Court · 1996
- John B. White, Inc. v. CommissionerUnited States Tax Court · 1971
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