Brush Wellman, Inc. v. Commissioner
United States Tax Court
Held: Petitioner's practical capacity determinations, which reflected productive capability instead of reflecting average actual production or anticipated sales, satisfy the requirements of the practical capacity regulation, sec. 1.471-11(d)(4), Income Tax Regs.
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Held: Petitioner's practical capacity determinations, which reflected productive capability instead of reflecting average actual production or anticipated sales, satisfy the requirements of the practical capacity regulation, sec. 1.471-11(d)(4), Income Tax Regs. Accordingly, petitioner is entitled under the regulation to deduct the part of fixed indirect production costs which is associated with idle capacity in the year of production rather than waiting to deduct it in the year in which the produced goods are sold.
1Opinion of the Court
Nims, Judge:
Respondent determined a $651,156 deficiency in petitioner’s income tax for the tax year 1972. Petitioner claims an overpayment of 1972 income tax in the amount of $4,032.
Due to concessions by the petitioner, the only issue remaining for decision is whether petitioner’s use of the practical capacity concept in costing its goods for 1975 conformed with the requirements of section 1.471-ll(d)(4), Income Tax Regs. Resolution of this issue determines if petitioner incurred a net operating loss in 1975 and is entitled to a carryback deduction for the year 1972.
FINDINGS OF FACT
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2Cases cited6 opinions
- Thor Power Tool Co. v. CommissionerSupreme Court of the United States · 1979
- Morrissey v. CommissionerSupreme Court of the United States · 1935
- Larson v. CommissionerUnited States Tax Court · 1976
- Maple Leaf Farms, Inc. v. CommissionerUnited States Tax Court · 1975
- Bangor Punta Operations, Inc. v. United StatesCourt of Appeals for the Seventh Circuit · 1972
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3Cited by1 opinion
- Brush Wellman, Inc. v. CommissionerUnited States Tax Court · 1982