C. M. Gooch Lumber Sales Co. v. Commissioner
United States Tax Court
Petitioner, a sales agent, customarily maintained running accounts with its principals. Cash advances, commissions, allowances, and overhead charges were debited and proceeds of current sales were credited, to the account. No interest was charged on debit balances or incurred on credit balances. Petitioner and one of its principals, Harriston Lumber Co., which had financial and operating difficulties, were part of a group of related corporations.
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Petitioner, a sales agent, customarily maintained running accounts with its principals. Cash advances, commissions, allowances, and overhead charges were debited and proceeds of current sales were credited, to the account. No interest was charged on debit balances or incurred on credit balances. Petitioner and one of its principals, Harriston Lumber Co., which had financial and operating difficulties, were part of a group of related corporations. Harriston Lumber went into liquidation in January 1962. Held, under all the circumstances, petitioner's net advances to Harriston Lumber as of June…
1Opinion of the Court
OPINION
The principal question before us is whether petitioner is entitled to a bad debt deduction under section 166(a)2 for the unpaid balance of non-interest-bearing “open account” advances to a related company which petitioner represented as a sales agent.3 The resolution of this question turns upon the proper characterization of the advances, petitioner contending that they represented bona fide indebtedness and respondent asserting that they were capital in nature, having been placed entirely at the risk of the business without expectation of repayment.
Both parties have sought to becloud…
2Cases cited20 opinions
- Interstate Transit Lines v. CommissionerSupreme Court of the United States · 1943
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- Gooding Amusement Co. v. CommissionerUnited States Tax Court · 1954
- John v. Rowan v. United StatesCourt of Appeals for the Fifth Circuit · 1955
- Kraft Foods Company v. Commissioner of Internal Revenue, (Two Cases)Court of Appeals for the Second Circuit · 1956
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3Cited by64 opinions
- Professional Services v. CommissionerUnited States Tax Court · 1982
- Litton Business Systems, Inc. v. CommissionerUnited States Tax Court · 1973
- Santa Anita Consol., Inc. v. CommissionerUnited States Tax Court · 1968
- Mennuto v. CommissionerUnited States Tax Court · 1971
- Fisher v. CommissionerUnited States Tax Court · 1970
59 more not listed; retrieve them via the Exa API.