Appeal of Mianus Motor Works, Inc.

5 B.T.A. 435

• Court: United States Board of Tax Appeals
• Decided: November 10, 1926
• Docket: Docket No. 6052
• Status: Published

Opinion

OPINION.

Phillips:

At the hearing the appeal was submitted upon the admitted allegations of the petition, which are set out in the findings of fact. It is alleged and admitted that the payment received in 1920 accrued in 1918. Although such an admission necessarily involves both conclusions of law and fact, we must regard the pleadings as admitting such primary facts as would establish an accrual in 1918, since we do not have before us any of the facts upon which the ultimate conclusion is based.

Apparently, therefore, we are called upon to determine whether, when the taxpayer keeps his books on the accrual basis and receives in 1920 settlement of an amount which accrued in 1918, such amount should be included in 1920 income. The law is well settled that, when books are kept on an accrual basis, gross income is to be reported in the year in which it accrues. Sections 212 and 213, Revenue Act of 1918. Appeal of B. B. Todd, Inc., 1 B. T. A. 762. Upon the record we conclude that the payment in question was properly reported as a part of 1918 gross income.

Decision redetermining deficiency will be entered on 10 days' notice, under Rule 50.