SoRelle v. Commissioner
United States Tax Court
1. A. W. SoRelle (referred to as SoRelle) was a farmer and rancher who used a hybrid method of accounting, to wit, cash receipts and disbursements basis plus the use of inventories. He valued his inventories of farm products and livestock (including ordinary beef cattle) pursuant to the "farm-price method," but apparently valued his inventory of breeding cattle pursuant to an average purchase cost method.
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1. A. W. SoRelle (referred to as SoRelle) was a farmer and rancher who used a hybrid method of accounting, to wit, cash receipts and disbursements basis plus the use of inventories. He valued his inventories of farm products and livestock (including ordinary beef cattle) pursuant to the "farm-price method," but apparently valued his inventory of breeding cattle pursuant to an average purchase cost method. Held: (a) Use of a hybrid accounting method, as he used it, is improper; the accrual method more clearly reflects SoRelle's income and must be used by him. Receipts for 1945 sales collected…
1Opinion of the Court
OPINION.(a) The basic rule is that taxable net income must be computed in accordance with the method of accounting which the taxpayer regularly employs in keeping his books, but if that method does not clearly reflect income the computation is to be made in accordance with such method as in the opinion of the Commissioner does clearly reflect income. I. R. C., sec. 41.2 Two methods of accounting are generally recognized for income tax purposes — cash receipts and disbursements method and accrual method. It is well settled that hybrid methods of accounting which do not clearly reflect the…
2Cases cited36 opinions
- Cohan v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1930
- Helvering v. CliffordSupreme Court of the United States · 1940
- Helvering v. HorstSupreme Court of the United States · 1940
- United States v. AndersonSupreme Court of the United States · 1926
- Blair v. CommissionerSupreme Court of the United States · 1937
31 more not listed; retrieve them via the Exa API.
3Cited by91 opinions
- Enoch v. CommissionerUnited States Tax Court · 1972
- Mysse v. CommissionerUnited States Tax Court · 1972
- United States v. CattoSupreme Court of the United States · 1966
- Pessin v. CommissionerUnited States Tax Court · 1972
- Thomas W. Banks v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1963
86 more not listed; retrieve them via the Exa API.