Paramount Liquor Company v. Commissioner of Internal Revenue

STONE, Circuit Judge.

This is a petition to review a decision of the Tax Court denying a requested re-determination of an asserted deficiency in income tax for the calendar year 1949. The deficiency is concerned with one matter only — the disallowance by the Commissioner of an addition of $9,232.75 to taxpayer’s bad debts reserve for 1949.

With additional allowable exemptions, a basic theory of the income tax law is to measure the tax by the net income of the taxpayer. “Bad debts” are obviously an element in determination of this net income in ascertainment of when a credit obligation can…