Appeal of Kleeman Dry Goods Co.

Board of Tax Appeals

Appeal of Kleeman Dry Goods Co.

2 B.T.A. 369

CourtUnited States Board of Tax Appeals

DecidedJuly 15, 1925

DocketDocket No. 2874

StatusPublished

Cited by1 cases

This text of 2 B.T.A. 369 (Appeal of Kleeman Dry Goods Co.) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Appeal of Kleeman Dry Goods Co., 2 B.T.A. 369 (bta 1925).

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Opinion

[371]*371OPINION.

Ivins:

The taxpayer’s inventory method produces a result' which is neither cost nor cost or market, but simply an estimate of the sale value of the entire stock of merchandise on hand. It was testified that in inspecting the merchandise the officials would find articles which in their opinion had deteriorated fully 50 per cent in value, and perhaps in the same department other items which had maintained full value. Yet items of the two classes mentioned, and all other merchandise in that department, were regarded as one lot, and a general average, running from 2 per cent to 15 per cent, was stricken off cost.

We are not persuaded that the depreciated value (based on cost) of the taxpayer’s inventory as determined by the method above discussed represented market, as the taxpayer contends, and therefore the Commissioner’s determination on that point is approved.

The three accruals detailed in the findings represent liabilities actually incurred during the taxable period, and the taxpayers misnomer of them as reserves can not affect their true character. These items were incurred, and properly accrued at January 31, 1920, and the taxpayer may deduct them from income for the taxable period ending on that date.

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[371]*371OPINION.

Ivins:

The taxpayer’s inventory method produces a result' which is neither cost nor cost or market, but simply an estimate of the sale value of the entire stock of merchandise on hand. It was testified that in inspecting the merchandise the officials would find articles which in their opinion had deteriorated fully 50 per cent in value, and perhaps in the same department other items which had maintained full value. Yet items of the two classes mentioned, and all other merchandise in that department, were regarded as one lot, and a general average, running from 2 per cent to 15 per cent, was stricken off cost.

We are not persuaded that the depreciated value (based on cost) of the taxpayer’s inventory as determined by the method above discussed represented market, as the taxpayer contends, and therefore the Commissioner’s determination on that point is approved.

The three accruals detailed in the findings represent liabilities actually incurred during the taxable period, and the taxpayers misnomer of them as reserves can not affect their true character. These items were incurred, and properly accrued at January 31, 1920, and the taxpayer may deduct them from income for the taxable period ending on that date.

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