Hachette USA v. Commissioner
United States Tax Court
Ps filed their consolidated Federal income tax returns electing under sec. 458, I.R.C., to exclude from gross income the sales revenue attributable to magazines that were returned by the purchasers shortly after the close of the tax year. In computing gross income Ps originally made correlative adjustments to cost of goods sold pursuant to sec. 1.458-1(g), Income Tax Regs.
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Ps filed their consolidated Federal income tax returns electing under sec. 458, I.R.C., to exclude from gross income the sales revenue attributable to magazines that were returned by the purchasers shortly after the close of the tax year. In computing gross income Ps originally made correlative adjustments to cost of goods sold pursuant to sec. 1.458-1(g), Income Tax Regs. Subsequently they filed amended returns recomputing gross income without the cost adjustments required by the regulation, taking the position that the regulation is invalid. Held: Because Congress did not intend to…
1Opinion of the Court
OPINION
Laro, Judge:
These cases were consolidated for trial, briefing, and opinion, and submitted to the Court without trial pursuant to Rule 122(a).1 Hachette USA, Inc. (Hachette USA), and its subsidiary Curtis Circulation Co. (Curtis) petitioned the Court for redetermination of the following Federal income tax deficiencies determined by respondent:
Docket No. 11693-94:
Taxable year Deficiency
1987 $665,225
Docket No. 11694-94:
Taxable year
1987 . 139,502
TYE
Nov. 30, 1988 . 2,535,928
After concessions, the issues for decision are: (1) Whether section 1.458-1(g), Income Tax Regs., which requires a…
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