2 T.C. 216 (1943), 109881, Fincannon v. C. I. R.

Docket Nº:109881.
Citation:2 T.C. 216
Opinion Judge:DISNEY, Judge:
Party Name:BERRYMAN D. FINCANNON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Attorney:Robert R. Milam, Esq., for the petitioner. J. Marvin Kelley, Esq., for the respondent.
Case Date:June 25, 1943
Court:United States Tax Court
 
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Page 216

2 T.C. 216 (1943)

BERRYMAN D. FINCANNON, PETITIONER,

v.

COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

No. 109881.

United States Tax Court.

June 25, 1943

The petitioner kept his individual accounts on a cash basis. He owned individually a school book depository business, the books of which were kept upon the same accrual basis which had for several years been followed by a corporation from whom the petitioner took over the business. Held, income from the school book depository business must be reported upon an accrual basis.

Robert R. Milam, Esq., for the petitioner.

J. Marvin Kelley, Esq., for the respondent.

Page 217

OPINION

DISNEY, Judge:

This case involves income tax for the calendar year 1937. A deficiency of $9,755.55 was determined. The question presented it as to the proper year in which there should be taxed to the petitioner certain commissions, which in turn depends upon whether he is upon the cash basis or an accrual basis of accounting as to such income.

The facts may be briefly stated: The income tax return for the taxable year was filed with the collector for the district of Florida at Jacksonville, Florida. The Florida School-Book Depository, Inc., a corporation of which the petitioner was the dominant stockholder, was from about 1917 and until June 1937 engaged in the business of representing various publishers of school books and the distribution of their products in the State of Florida. It rendered its income tax returns upon an accrual basis. It had a large number of contracts with various publishers, the gist of which contracts was that the corporation should receive from the publishers, store, and distribute school books throughout Florida, collect from the state therefor, allow the state a 10 percent discount, retain 10 percent as its commission, and remit the balance to the publishers. After 1925 there was a free textbook law in Florida and from and including 1937 about 90 percent of the business was with the State of Florida. The corporation took no title to the books which were charged to, warehoused by, and distributed by it, but received them upon consignment, and title passed to the state when delivered to it. The books were carried on the records of the corporation as consigned inventory, and accounts receivable were set up showing the amounts owing by the state to the publishers. The corporation collected for the publishers.

In June 1937 petitioner took over the business from...

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