Ostheimer v. Commissioner
United States Board of Tax Appeals
A lessee of chattels is not authorized by the Revenue Act of 1918 to take as a deduction amounts set aside as a reserve each year in anticipation of liability under the terms of the lease to replace the property as good as new when the lease was surrendered, canceled, or forfeited and the property returned to the lessor.
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A lessee of chattels is not authorized by the Revenue Act of 1918 to take as a deduction amounts set aside as a reserve each year in anticipation of liability under the terms of the lease to replace the property as good as new when the lease was surrendered, canceled, or forfeited and the property returned to the lessor. Only the amounts actually expended or for which liability had actually been incurred during each taxable year may be deducted during the respective taxable periods.
1Opinion of the Court
*20OPINION.
Trammell :
The question presented is whether the taxpayer had a right to deduct from his gross income during the taxable periods in question a reserve set up out of earnings during the respective periods for the purpose of satisfying his anticipated liability to the lessor to maintain and restore on the termination of the lease the movable chattels included therein in as good condition as when received.
If it be held that the taxpayer is entitled to a deduction of a reasonable allowance for the wear and tear and exhaustion of the property used in his business under the lease, it was…
2Cases cited1 opinion
- Ed. Schuster & Co. v. WilliamsCourt of Appeals for the Seventh Circuit · 1922
3Cited by11 opinions
- American Title Co. v. CommissionerUnited States Board of Tax Appeals · 1933
- Wilson Furs, Inc. v. CommissionerUnited States Board of Tax Appeals · 1933
- Milwaukee & Suburban Transport Corp. v. CommissionerUnited States Tax Court · 1959
- American Cigar Co. v. CommissionerUnited States Board of Tax Appeals · 1930
- American Title Co. v. CommissionerUnited States Board of Tax Appeals · 1933
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