Commissioner of Internal Revenue v. Frame

Although this taxpayer kept his books on the accrual basis he filed his income tax returns for the taxable years 1942 through 1945 on the cash basis in violation of Section 41 of the Internal Revenue Code, 26 U.S.C.A. § 41. Upon examining his return for 1945 the Commissioner adjusted the taxpayer’s taxable income for that year to the accrual basis shown by his books and added thereto a sum representing the net accounts receivable appearing on the books on December 31, 1944. The Commissioner stated that this was done- “to take into consideration * * * items * * * which are not reflected in the…