Budget Credits, Inc. v. Commissioner
United States Tax Court
Petitioner, a wholly owned subsidiary, is engaged solely in the handling of its parent's accounts receivable. Its parent operated department stores which sold tangible personal property at retail. The parent sold its accounts receivable to petitioner, which thereupon sold them to a bank. Held, that, by virtue of sec. 166(g), I.R.C. 1954, respondent's disallowance of petitioner's addition to a reserve for bad debts is sustained.
1Opinion of the Court
OPINION
Tannenwald, Judge:
Respondent determined deficiencies in petitioner’s Federal income tax for tbe fiscal years ended July 31, 1960, July 81,1961, July 28, 1962, and July 27,1963, of $13,000, $50,468.73, $26,676.25, and $9,880, respectively. In view of petitioner’s concessions, the sole issue for determination is whether petitioner is entitled to deduct those additions to its reserve for bad debts for each of the fiscal years in question, which were computed by reference to accounts receivable sold by petitioner to a bank.
All of the facts have been stipulated, and the stipulation of…
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