Miller v. Commissioner
United States Tax Court
Section 3806 (a) (3). -- Petitioner received income of $ 77,313.83 in 1944 which was subject to renegotiation. In anticipation of the renegotiation petitioner set up a "Reserve for renegotiation expense" in the amount of $ 7,000 and deducted this amount in 1944 as a business expense. No part of the reserve was paid in 1944. Petitioner was on the cash basis. Petitioner contends that section 3806 (a) (3) permits him to do this.
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Section 3806 (a) (3). -- Petitioner received income of $ 77,313.83 in 1944 which was subject to renegotiation. In anticipation of the renegotiation petitioner set up a "Reserve for renegotiation expense" in the amount of $ 7,000 and deducted this amount in 1944 as a business expense. No part of the reserve was paid in 1944. Petitioner was on the cash basis. Petitioner contends that section 3806 (a) (3) permits him to do this. Held, section 3806 (a) (3) is limited to excessive profits and does not permit the deduction of amounts paid in a subsequent year relating to the renegotiation to be…
1Opinion of the Court
OPINION.
Withey, Judge:
Petitioner is an individual who kept his books and filed his income tax return for the taxable year on a cash basis. He believed that excessive profits realized by him during the taxable year would be renegotiated by the Navy Department in a subsequent year. In anticipation of contesting the renegotiation, he set up a reserve of $7,000 for renegotiation expense and deducted the amount as a business expense on his 1944 income tax return. No part of the reserve was paid by the petitioner in 1944. The Commissioner maintains that the reserve deducted by the petitioner is not…
2Cases cited2 opinions
- Kurtzon v. CommissionerUnited States Tax Court · 1952
- Cramp Shipbuilding Co. v. CommissionerUnited States Tax Court · 1951
3Cited by3 opinions
- Martin-Marietta Corporation v. The United StatesUnited States Court of Claims · 1969
- Martin-Marietta Corporation v. The United StatesUnited States Court of Claims · 1969
- Miller v. CommissionerUnited States Tax Court · 1953