Gibbs v. Commissioner
United States Tax Court
A partnership operated a dairy farm and inventoried its cows on the "farm price" method. During the taxable year it culled 40 cows from the herd because they were no longer of value for dairy purposes. Held, gain or loss on sale of such cows must be measured from the opening inventory for the taxable year applicable to such cows (sec. 113(a)(1), I.R.C. 1939) and not from a zero basis.
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A partnership operated a dairy farm and inventoried its cows on the "farm price" method. During the taxable year it culled 40 cows from the herd because they were no longer of value for dairy purposes. Held, gain or loss on sale of such cows must be measured from the opening inventory for the taxable year applicable to such cows (sec. 113(a)(1), I.R.C. 1939) and not from a zero basis. Held, further, that that portion of the opening inventory applicable to such cows must be eliminated from the opening inventory.
1Opinion of the Court
OPINION.
Raum, Judge:
Respondent determined deficiencies in income taxes for the year 1953, as follows:
J. Clifford Gibbs and Marion W. Gibbs_$423.30
Frank W. Gibbs and Irene B. Gibbs_ 523.84
The sole issue is whether dairy farmers, who elected to make their returns upon an inventory basis valuing their dairy animals according to the “farm price method,”1 realized a long-term capital gain or sustained an ordinary loss upon the sale of 40 cows during the year 1953. The facts have been stipulated.
J. Clifford Gibbs and Marion W. Gibbs (husband and wife) and Frank W. Gibbs and Irene B. Gibbs (husband…
2Cases cited4 opinions
- Frank Scofield, Collector of Internal Revenue v. A. J. Lewis and Grace M. LewisCourt of Appeals for the Fifth Circuit · 1958
- Bernard B. Carter (B. B. Carter) and Tommie Velma Carter, Husband and Wife v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1958
- John E. Goodenow v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1956
- Goodenow v. CommissionerUnited States Tax Court · 1955
3Cited by3 opinions
- United States v. Harold M. Ekberg and Secrie EkbergCourt of Appeals for the Eighth Circuit · 1961
- Little v. CommissionerUnited States Tax Court · 1960
- Gibbs v. CommissionerUnited States Tax Court · 1959