Globe Corp. v. Commissioner
United States Tax Court
In 1945 petitioner performed certain packaging and preservation work under four Government contracts, the prices subject to negotiation between the parties later on a "fair and reasonable" or "equitable" basis. The prices were agreed upon and reduced to writing and paid in 1946, after petitioner's 1945 returns were filed.
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In 1945 petitioner performed certain packaging and preservation work under four Government contracts, the prices subject to negotiation between the parties later on a "fair and reasonable" or "equitable" basis. The prices were agreed upon and reduced to writing and paid in 1946, after petitioner's 1945 returns were filed. Petitioner, on the accrual basis of accounting, accrued the amounts agreed upon in 1946. Respondent included these amounts in petitioner's income for 1945. Held, these amounts were properly accrued in 1946 when the amounts were negotiated and fixed by written agreement. All…
1Opinion of the Court
OPINION.
Bruce, Judge:
Respondent determined a deficiency in petitioner’s income tax for 1945 after several adjustments, only one of which remains in controversy. The action with respect to this item was explained in the notice of deficiency as follows:
Under the authority of, and in compliance with the provisions of section 41 of the Internal Revenue Code, it is held that $181,075.02 received as payment under the terms of certain contracts, is income in 1945 as provided in section 42 of the Internal Revenue Code and regulations issued thereunder. Your income is, therefore, increased $181,075.02…
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