Hallmark Cards, Inc. v. Commissioner
United States Tax Court
P, a calendar year and accrual basis taxpayer, is in the business of manufacturing and selling greeting cards and other "social expression" merchandise. For valid business reasons, P ships Valentine merchandise to customers in the year prior to that in which the holiday occurs. The terms of sale for this merchandise specify that title and risk of loss do not pass to the customer until Jan. 1 of the following year.
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P, a calendar year and accrual basis taxpayer, is in the business of manufacturing and selling greeting cards and other "social expression" merchandise. For valid business reasons, P ships Valentine merchandise to customers in the year prior to that in which the holiday occurs. The terms of sale for this merchandise specify that title and risk of loss do not pass to the customer until Jan. 1 of the following year. Held, since the "all events" test is not satisfied until the year following shipment, P is not required to accrue income from advance-shipped Valentine merchandise in the year of…
1Opinion of the Court
KÖRNER, Judge:
Respondent determined the following deficiencies in petitioner’s Federal income taxes:
Year Deficiency
1975. $7,547,995
1976. 422,704
1977. 2,454,969
1978 . 1,521,251
After concessions, the sole issue for determination is whether income from the sale of Valentine merchandise is properly reported by petitioner, a calendar year taxpayer, in the year in which title and risk of loss pass to the purchaser, or, as respondent maintains, whether the income from such sales is accruable as of December 31 of the year in which the merchandise is shipped.
FINDINGS OF FACT
The facts of this case have…
2Cases cited18 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Lucas v. American Code Co.Supreme Court of the United States · 1930
- Burnet v. Sanford & Brooks Co.Supreme Court of the United States · 1931
- Thor Power Tool Co. v. CommissionerSupreme Court of the United States · 1979
- Spring City Foundry Co. v. CommissionerSupreme Court of the United States · 1934
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