Higginbotham-Bailey-Logan Co. v. Commissioner
United States Board of Tax Appeals
1. Petitioner reduced its gross sales by 50 per centum of the sales price of goods which it had been notified, prior to the close of the taxable year, would be returned. The action of the Commissioner in disallowing such deduction approved. 2. It was the custom of petitioner always to take advantage of cash discounts and during its existence it had computed its inventories by giving effect to such discounts.
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1. Petitioner reduced its gross sales by 50 per centum of the sales price of goods which it had been notified, prior to the close of the taxable year, would be returned. The action of the Commissioner in disallowing such deduction approved. 2. It was the custom of petitioner always to take advantage of cash discounts and during its existence it had computed its inventories by giving effect to such discounts. Held, that such inventories may properly be used in computing taxable income, the effect being to allow cash discount as a deduction when the goods were sold and not when payment is made.…
1Opinion of the Court
*574OPINION.
Phillips:(1) The facts with respect to the first issue are found as pleaded in the petition and admitted in the answer, with some additional facts established by testimony. It appears that prior to the close of the taxable year petitioner had been notified that goods which it had sold for $50,226.44 and had shipped to customers would be returned. None of the goods were in fact returned prior to the dose of the taxable year. The petitioner’s officers estimated that the average gross profit on such goods was 21 or 22 per cent out of the sales price, that the market value was less than…
2Cited by63 opinions
- Magnon v. CommissionerUnited States Tax Court · 1980
- Rubnitz v. CommissionerUnited States Tax Court · 1977
- Rhodes v. CommissionerCourt of Appeals for the Sixth Circuit · 1939
- Pachella v. CommissionerUnited States Tax Court · 1961
- Diamond v. CommissionerUnited States Tax Court · 1989
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