Dearborn Gage Co. v. Commissioner
United States Tax Court
Petitioner, a corporation and successor in interest to a partnership in a 1957 transaction qualifying under sec. 351, was a manufacturer of gages and gage blocks. It and its predecessor valued inventory by including only direct costs of labor and materials. Overhead expenses were deducted in the year spent.
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Petitioner, a corporation and successor in interest to a partnership in a 1957 transaction qualifying under sec. 351, was a manufacturer of gages and gage blocks. It and its predecessor valued inventory by including only direct costs of labor and materials. Overhead expenses were deducted in the year spent. Held, petitioner's method of accounting does not clearly reflect income and therefore respondent's change in accounting method requiring the inclusion of overhead in inventory is sustained. Held, further, sec. 481 is applicable. Held, further, in computing the sec. 481 adjustment to the…
1Opinion of the Court
TaNNENWAld, Judge:
Respondent determined deficiencies in petitioner’s income tax for the taxable years ended November 30, 1960, 1961, and 1962, hi the amounts of $32,962.47, $4,218.02, and $979.78, respectively.
Petitioner having conceded all other items in the deficiency notice, two issues remain for our consideration:(1) Was respondent entitled to require petitioner to include overhead costs in inventory values instead of deducting such costs in the year spent?(2) If so, to what extent, if any, were adjustments properly made under section 481 ?1
FINDINGS OF FACT
Some of the facts are stipulated…
2Cases cited32 opinions
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- Graff Chevrolet Company v. Ellis Campbell, Jr., District Director of Internal RevenueCourt of Appeals for the Fifth Circuit · 1965
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