Geyer, Cornell & Newell, Inc. v. Commissioner
United States Tax Court
1. Income -- Bad Debt Reserve -- Restoring Unneeded Balance to Income. -- A balance in a reserve for bad debts, built up by additions which offset taxable income, is properly to be restored to income of the year in which the need for maintaining the reserve ceases, a year prior to the year here in question. 2. Excess Profits -- Abnormal Income -- Attributable to Other Years. -- Regardless of whether certain income formed a class within the meaning of section 721 (a) (1), I.…
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1. Income -- Bad Debt Reserve -- Restoring Unneeded Balance to Income. -- A balance in a reserve for bad debts, built up by additions which offset taxable income, is properly to be restored to income of the year in which the need for maintaining the reserve ceases, a year prior to the year here in question. 2. Excess Profits -- Abnormal Income -- Attributable to Other Years. -- Regardless of whether certain income formed a class within the meaning of section 721 (a) (1), I. R. C., and even though it represented net abnormal income, held, that no part of it was attributable to other years.…
1Opinion of the Court
OPINION.
MuRdock, Judge:
The only issue for decision in the case of Geyer is whether it realized income in 1940 of $48,942.88, an amount which appeared on its books as a reserve for bad debts. The Commissioner has held and contends that this amount, having been deducted from income in prior years, must be restored to income for 1940 because the need for the reserve ceased in that year. The amount in question was built up through additions to, the reserve which were deducted from income in years prior to 1984. A reserve consists of entries upon books of account. It is neither an asset nor a…
2Cases cited1 opinion
- Brown v. HelveringSupreme Court of the United States · 1934
3Cited by73 opinions
- Nash v. United StatesSupreme Court of the United States · 1970
- Commissioner of Internal Revenue v. First State BankCourt of Appeals for the Fifth Circuit · 1948
- West Seattle Nat'l Bank v. CommissionerUnited States Tax Court · 1959
- Citizens Federal Savings and Loan Association of Cleveland v. United StatesCourt of Appeals for the Federal Circuit · 1961
- Differential Steel Car Co. v. Comm'rUnited States Tax Court · 1951
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