Farmers Elevator & Exchange v. COMMISSIONER OF INTERNAL REVENUE

• Citation: 10 BTA 379
• Decision Date: 28 January 1928
• Docket Number: Docket No. 2258.
• Parties: FARMERS ELEVATOR & EXCHANGE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

10 B.T.A. 379 (1928)

FARMERS ELEVATOR & EXCHANGE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 2258.

Board of Tax Appeals.

Promulgated January 28, 1928.

M. J. Holland, C. P. A., for the petitioner.

Arthur H. Murray, Esq., for the respondent.

This proceeding results from the determination by respondent of a deficiency in profits and income taxes for 1919 amounting to $1,746.65.

Petitioner alleges that respondent erred with respect to the inventory at the close of the year 1919 in that he accepted and did not adjust the amount of the inventory as reported in Schedule A-2 of the original return filed by petitioner for the calendar year 1919, whereas the inventory should be revised with respect to (1) the valuation of poultry and produce on hand at Wapello, Iowa, at the close of 1919, and (2) the valuation of dressed poultry in storage at Albany, N. Y., at the close of 1919.

FINDINGS OF FACT.

Petitioner is an Iowa corporation organized in May, 1917, with principal office at Wapello, and is engaged in the buying and selling of produce, grain, feed, coal, and tile.

Petitioner took inventories on or about December 31, 1918, November 30, 1919, and November 30, 1920, and it determined its profits as of those dates. It filed calendar-year income-tax returns for 1918 and 1919. The calendar-year return filed by petitioner for 1919 was actually based on the 11-month period ended November 30, 1919. The inventory of petitioner of November 30, 1919, amounted as follows:

                     Poultry on hand at Wapello, Iowa _____________________  $7,094.04
                     Dressed poultry on hand at Albany, N. Y ______________   4,139.77
                     Various commodities and merchandise __________________  10,921.53
                                                                            __________
                           Total __________________________________________  22,155.34
                

The dressed poultry on hand at Albany was in bad condition and was in cold storage on November 30, 1919.

The taxable net income for 1919 computed by respondent was based on the net profits according to the books, with adjustments, none of which are in issue here. Respondent accepted the above inventory without adjustment.

Respondent determined a net loss amounting to $18,337.84 for the 12 months ended November 30, 1920, based upon the loss shown by the books for the same period and with adjustments, none of which are at issue here.

The poultry at Albany was sold in 1920.

OPINION.

TRUSSELL:

The sole issue before us is a question of the revaluation of poultry on hand on November 30, 1919, which composed a portion of the inventory of the stock in trade of petitioner. Respondent has accepted the amount of this inventory as reported in the return filed by petitioner, but petitioner seeks a revaluation of the poultry, alleging that it evidently was valued too highly originally. The poultry was on hand in part at Wapello, and in part in the form of dressed poultry in cold storage at Albany. The two stocks present separate questions of valuation as will presently appear.

Relative to the poultry on hand at Wapello, it is the claim of petitioner that the valuation was probably an opinion of market value and it far exceeded cost. The record is devoid of all detail of the original...