Monroe Abstract Corp. v. Commissioner

The taxpayer, engaged in the business of making and certifying abstracts of title, agreed with a title insurance company that in consideration of the latter's guaranteeing its title searches, it would deposit an amount equal to 5 percent of its income from title searches in a special reserve to cover possible losses arising out of those searches. Amounts so deposited in the taxable year are held: (1) to be includable in taxable income because the subsequent use of or restrictions on income after receipt do not affect its taxability, (George Hyatt,36 B.T.A. 121, followed); (2) not to entitle…