Surface Combustion Corp. v. Commissioner
United States Tax Court
1. Expenses incurred during base period in the correction of basic defects in design of new model unit heater manufactured and sold by petitioner, held, abnormal in character, and not the consequence of an increase in gross income, nor of a decrease in any other deduction, nor of a change at any time in the type, manner of operation, size or condition of petitioner's business, and, therefore, not properly deducted in computation of base period net income for excess profits…
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1. Expenses incurred during base period in the correction of basic defects in design of new model unit heater manufactured and sold by petitioner, held, abnormal in character, and not the consequence of an increase in gross income, nor of a decrease in any other deduction, nor of a change at any time in the type, manner of operation, size or condition of petitioner's business, and, therefore, not properly deducted in computation of base period net income for excess profits tax purposes. 2. Expenditures made in efforts to solve corrosion problem which arose in connection with the experimental…
1Opinion of the Court
OPINION.
Kern, Judge:
Janitrol. — The applicable sections of the excess profits tax act are set forth below.1 The first argument advanced by petitioner with respect to this issue is that the expenditures incurred by it in the correction of defective heating units were abnormal for petitioner, and were attributable to claims against petitioner, within the meaning of section 711 (b) (1) (H) of the Internal Revenue Code.
The heaters were sold under a warranty of freedom from defects and workmanship for a period of twelve months. When the defects were discovered, petitioner realized at once the…
2Cases cited5 opinions
- William Leveen Corp. v. CommissionerUnited States Tax Court · 1944
- Green Bay Lumber Co. v. CommissionerUnited States Tax Court · 1944
- Lincoln Electric Co. v. CommissionerUnited States Tax Court · 1946
- R. C. Harvey Co. v. CommissionerUnited States Tax Court · 1945
- Wilcox Inv. Co. v. CommissionerUnited States Tax Court · 1944
3Cited by40 opinions
- H. S. D. Co. v. Kavanagh, Collector of Internal RevenueCourt of Appeals for the Sixth Circuit · 1951
- 555, Inc. v. CommissionerUnited States Tax Court · 1950
- Times Publishing Co. v. CommissionerUnited States Tax Court · 1949
- E. B. & A. C. Whiting Co. v. CommissionerUnited States Tax Court · 1948
- Graev v. CommissionerUnited States Tax Court · 2013
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