Hartley v. Commissioner
United States Tax Court
Petitioners, during 1949 and 1950, were engaged in the business of buying old motor blocks, rebuilding, and then selling them. They kept their books on an accrual basis except that inventories of old and rebuilt motor blocks were not taken into account in determining income. Held: 1. The accounting method was a hybrid method which did not clearly reflect income but which most closely resembled an accrual method.
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Petitioners, during 1949 and 1950, were engaged in the business of buying old motor blocks, rebuilding, and then selling them. They kept their books on an accrual basis except that inventories of old and rebuilt motor blocks were not taken into account in determining income. Held: 1. The accounting method was a hybrid method which did not clearly reflect income but which most closely resembled an accrual method. Therefore, an accrual method, taking into account inventories of the old and rebuilt motor blocks, must be used. Elsie SoRelle, 22 T. C. 459. The aforementioned accounting treatment…
1Opinion of the Court
OPINION.
Black, Judge:
Respondent has determined that, in order to clearly reflect income for the years in issue, petitioners must take into account the inventories of old and rebuilt motor blocks in computing cost of goods sold of the business carried on under the name of International Motor Rebuilding Company. Sec. 41, I. R. C. 1939.1
In Elsie SoRelle, 22 T. C. 459, filed June 7,1954, we said:
Two methods of accounting are generally recognized for income tax purposes— cash receipts and disbursements method and accrual method. It is well settled that hybrid methods of accounting which do not…
2Cases cited15 opinions
- United States v. AndersonSupreme Court of the United States · 1926
- Security Flour Mills Co. v. CommissionerSupreme Court of the United States · 1944
- Burnet v. HoustonSupreme Court of the United States · 1931
- Niles Bement Pond Co. v. United StatesSupreme Court of the United States · 1930
- Caldwell v. Commissioner of Internal Revenue. Commissioner of Internal Revenue v. CaldwellCourt of Appeals for the Second Circuit · 1953
10 more not listed; retrieve them via the Exa API.
3Cited by61 opinions
- Courtney v. CommissionerUnited States Tax Court · 1957
- Fred N. Acker v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1958
- Wilkinson-Beane, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1970
- Abbott v. CommissionerUnited States Tax Court · 1957
- Patchen v. CommissionerUnited States Tax Court · 1956
56 more not listed; retrieve them via the Exa API.