David J. Joseph Co. v. Com'r of Internal Revenue, 10598.
| Citation | 136 F.2d 410 |
| Decision Date | 21 June 1943 |
| Docket Number | No. 10598.,10598. |
| Parties | DAVID J. JOSEPH CO. v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Howard Gould, of Cincinnati, Ohio, and Leonard B. Levy, of New Orleans, La., for petitioner.
Robt. N. Anderson, Sewall Key, and Newton K. Fox, Sp. Assts. to the Atty. Gen., Samuel O. Clark, Jr., Asst. Atty. Gen., and J. P. Wenchel, Chief Counsel, Bureau of Internal Revenue, and Charles E. Lowery, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., for respondent.
Before HUTCHESON, HOLMES, and WALLER, Circuit Judges.
David J. Joseph, Inc., transferor of petitioner, during its fiscal year ending September 30, 1937, entered into a number of contracts with British Iron & Steel Corporation, Ltd., for the sale of scrap iron and steel to the latter, totalling $7,003,256.17. The contracts provided that if any shortage existed upon unloading the cargo by the buyer, the seller would refund to the buyer the value of any such shortage, not to exceed one per cent. The contracts also provided that the seller would be responsible to the buyer for any difference in quality as billed and as finally graded upon unloading. The seller set up on its books during its fiscal year a reserve for weight shortages and quality allowances in the amount of $109,753.47. During the fiscal year seller shipped over $4,000,000 of its $7,000,000 contract. The balance of the business, amounting to approximately $3,000,000, was not shipped during the fiscal year. Petitioner reported its income on the accrual basis.
It was stipulated between petitioner and Commissioner of Internal Revenue that: "In the course of transportation and shipment scrap iron and steel loses a small percentage of weight due to scaling, chipping, and loosening of adhering dirt and debris in the course of handling."
Under the contract petitioner (seller) would be liable to the buyer for this shortage in weight to an amount not to exceed one per cent.
The buyer was not able to furnish ships for the transportation of the unshipped portion of the scrap and it was agreed that the buyer would pay the seller on memorandum billings. In preparing the memorandum invoices it was necessary to approximate the average price of the different grades of material sold.
The Commissioner disallowed, as a deduction from gross income, the amount set up as a reserve against weight shortages and quality allowances, on the ground that such reserve was not a definite liability accruable during the taxable year. The Tax Court of the United States sustained the action of the...
To continue reading
Request your trial
-
Guardian Investment Corporation v. Phinney
...516, 64 S.Ct. 364, 88 L.Ed. 270; Lucas v. American Code Co., 1930, 280 U.S. 445, 50 S.Ct. 202, 74 L.Ed. 538; David J. Joseph Co. v. Commissioner, 5 Cir., 1943, 136 F.2d 410; Commissioner v. Brooklyn Radio Service Corporation, 2 Cir., 1935, 79 F.2d 833; Noxon Chem. Prods. Co. v. Commissioner......
-
Pac. Vegetable Oil Corp. v. Comm'r of Internal Revenue
...132 F.2d 671, affirming 43 B.T.A. 784; Brown v. Helvering, 291 U.S. 193; Crescent Cotton Co., 5 B.T.A. 850; and David J. Joseph Co. v. Commissioner, 136 F.2d 410. Petitioner admittedly did not request or obtain permission to make a change in its method of accounting for income from copra sa......
-
Miami Beach Bay Shore Co. v. Com'r of Int. Revenue
... ... MIAMI BEACH BAY SHORE CO ... COMMISSIONER OF INTERNAL REVENUE ... No. 10644 ... Circuit Court of Appeals, Fifth ... ...
-
Juniata Farmers Coop. Ass'n v. Comm'r of Internal Revenue, Docket No. 4265-62.
...or expense in the fiscal year 1958 since the liability was still contingent. Brown v. Helvering, 291 U.S. 193; David J. Joseph Co. v. Commissioner, 136 F.2d 410, affirming a Memorandum Opinion of this Court. We sustain respondent on this issue. Decision will be entered under Rule 50. 1. All......