Hyatt v. Commissioner
United States Board of Tax Appeals
The taxpayer, licensed by the manufacturer to sell and apply a preparation against termites and guaranteeing effectiveness for five years, was required by the license contract to send to the licensor 10 percent of the price of his contracts with customers, to be held in escrow as a guaranty fund until expiration of the guaranty period; this requirement he fulfilled only in part. The full amount of the contract prices should be included in the taxpayer's income.
1Opinion of the Court
*122OPINION.
Sternhagen :
The petitioner contends that, because of his contract with the Bruce Co., 10 percent of each customer’s contract price must be regarded when received by him as being in trust and therefore not within his income. He relies upon Commissioner v. Cleveland Trinidad Paving Co., 62 Fed. (2d) 85; Benjamin Franklin Patterson, 21 B. T. A. 8; petition for review dismissed, 59 Fed. (2d) 1055. In those cases, however, the customer retained an amount to assure the performance of the contract, and it was held that while so rightfully retained by the customer the amount could not be…
2Cited by3 opinions
- Hyatt v. CommissionerUnited States Board of Tax Appeals · 1937
- Monroe Abstract Corp. v. CommissionerUnited States Board of Tax Appeals · 1940
- Warren Co. v. CommissionerUnited States Board of Tax Appeals · 1942