American Code Co. v. Commissioner of Internal Revenue

(after stating the facts as above). [1,2] The correctness of the action of tho Commissioner depends upon the construction of the Revenue Act of 1918. Section 234 (a) of that act (40 Stat. 1077) permits a corporation to deduct from its gross income:

“(1) All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on ‘ any trade or business. * * *

“(4) Losses sustained during the taxable year and not compensated for by insurance or otherwise. * * * ”

Tho act also permits taxpayers to file returns on tho accrual basis if their books are so kept. Section 232 (40…