San Miguel & Compañía v. Secretary of the Treasury

In its income tax returns for the tal years ending on August 31, 1943, and. on August 31, 1944, the petitioner deducted from its taxable income tax, as bad debts, two items amounting to $15,000 and $36,402.90, of the account owed to the petitioner by the Compañía de Cerámicas de Puerto Rico, Inc. During the tax year ending on August 31,- 1945, the petitioner received the entire balance of the account and declared it as income corresponding to the tax year ending August 31, 1945. The former Treasurer of Puerto Rico disallowed the exclusion of those two items, considered as bad accounts by the…