National Home Products, Inc. v. Commissioner
United States Tax Court
Petitioners discovered a sizeable shortage in their tobacco inventories near the end of 1970 which they believed to be from abnormal causes. However, they did not file claims against their insurance carrier or the alleged perpetrators of the misappropriation until after Dec. 31, 1970. Petitioners reduced their ending inventories of tobacco for 1970 to reflect the shortage, thus reducing taxable income.
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Petitioners discovered a sizeable shortage in their tobacco inventories near the end of 1970 which they believed to be from abnormal causes. However, they did not file claims against their insurance carrier or the alleged perpetrators of the misappropriation until after Dec. 31, 1970. Petitioners reduced their ending inventories of tobacco for 1970 to reflect the shortage, thus reducing taxable income. Respondent disallowed the inventory adjustment on the grounds of inadequate inventory records. Held: 1. Petitioners proved that they suffered a loss of inventory in 1970 and were entitled to…
1Opinion of the Court
Drennen, Judge:
Respondent determined deficiencies in petitioners’ income tax as follows:
National Home Products, Inc.
Year Deficiency
1967. $375,434
1970 . 22,095
Wisconsin Tobacco Co., Inc.
Year Deficiency
Apr. 30, 1966 $2,585.00
Apr. 30, 1967 520.00
1968 . 442.00
1969 . 1,516.75
The deficiencies result from partial disallowance on petitioners’ consolidated return for the taxable year 1970 of a reduction in the closing inventory of National Home Products, Inc., made in computing its cost of goods sold for 1970 and from disallowance of a deduction for legal and professional fees. Resulting loss…
2Cases cited15 opinions
- Helvering v. GowranSupreme Court of the United States · 1937
- Mayerson v. CommissionerUnited States Tax Court · 1966
- Ramsay Scarlett & Co. v. CommissionerUnited States Tax Court · 1974
- Ramsay Scarlett and Company, Inc. v. Commissioner of Internal Revenue, Baltimore Stevedoring Company, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Fourth Circuit · 1975
- United States Cartridge Co. v. United StatesSupreme Court of the United States · 1932
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- Conti v. CommissionerUnited States Tax Court · 1992
- Dayton Hudson Corp. v. CommissionerUnited States Tax Court · 1993
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