Foster Frosty Foods, Inc. v. Commissioner
United States Tax Court
Addition to Reserve for Bad Debt -- Sec. 166(c), I.R.C. 1954. -- The petitioner has no right under sec. 166(c) to deduct an addition to bad debt reserve for notes discounted and not then owned by it.
1Opinion of the Court
OPINION.
MuRdook, Judge:
Deductions for bad debts are allowed by section 166(a) in the year in which worthlessness occurs, whereas (c), by allowing “a deduction for a reasonable addition to a reserve for bad debts,” enables the taxpayer to take the deduction in anticipation of the actual worthlessness and to charge the current losses against the reserve thus created. The word “reasonable” brings a relative, as opposed to a definite, amount into the law. No set formula for computing “a reasonable addition” has ever been fixed by law, the regulations, or the courts. The computation depends upon…
2Cases cited4 opinions
- Lucas v. American Code Co.Supreme Court of the United States · 1930
- Putnam v. CommissionerSupreme Court of the United States · 1956
- Wilkins Pontiac v. Commissioner of Internal Revenue, Commissioner of Internal Revenue v. Wilkins PontiacCourt of Appeals for the Ninth Circuit · 1961
- Wilkins Pontiac v. CommissionerUnited States Tax Court · 1960
3Cited by17 opinions
- Western Oaks Bldg. Corp. v. CommissionerUnited States Tax Court · 1968
- Glenn L. Bolling and Ila L. Bolling, Mae L. Hausmann, Fairhills Company, B & H Homes, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1966
- Burbank Liquidating Corp. v. CommissionerUnited States Tax Court · 1963
- Maryland Savings-Share Insurance v. United StatesUnited States Court of Claims · 1981
- Central Bank Co. v. CommissionerUnited States Tax Court · 1963
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