John W. Butler, Inc. v. Commissioner

1 B.T.A. 1105, 1925 BTA LEXIS 2672

Opinion

OPINION.

Trussell :

The record of this appeal shows that the taxpayer kept its books of account consistently upon an accrual basis, with the exception that it did not carry upon such books the amounts of interest accruing upon its outstanding obligations to its stockholders; the book entries of such interest were made only at the times when payments were made. It is the opinion of the Board that, in order to reflect its true net income, the taxpayer’s interest deductions should be readjusted in such manner that in each year the deduction will agree with the amount of interest accrued upon its borrowed moneys. Appeal of Clarence Schock, 1 B. T. A. 528. We, therefore, hold that the Commissioner’s adjustments of interest deductions for the years 1918 and 1919 have been properly made, and that, for the year 1920, a further adjustment should be made allowing an accrued interest deduction in the amount of $2,145.84.

With respect to the disallowance of expense deductions, the taxpayer did not furnish any testimony or any evidence of any character in support of its contention. We are, therefore, left wholly uninformed as to what may have been the true character of the disbursements claimed to have been made, or even whether such disbursements were actually made, and upon the record as it stands the disallowance of portions of the taxpayer’s expense deductions .by the Commissioner must be approved.