George D. Patterson, District Director of Internal Revenue, Birmingham, Alabama v. Pizitz, Inc., Successor to Louis Pizitz Dry Goods Company

GRIFFIN B. BELL, Circuit Judge:

This is an appeal from a judgment for the taxpayer entered on a jury verdict. The taxpayer is a corporation operating a department store in Birmingham, Alabama. The reserve method for computing deductions for bad debts under Section 166(c) of the Internal Revenue Code of 1954 was used. 26 U.S.C.A. § 166(c). 1 The reserve for bad debts was based on adding an amount annually to the existing reserve so that the total reserve at the end of the year equaled six per cent of the outstanding accounts receivable. The addition which was made after charging bad debt losses…