Clifton Mfg. Co. v. Commissioner

Sternhagen, /.,

dissenting: I think that as a matter of law the 1934 interest accrued in that year and, since the taxpayer’s books and returns were on an accrual basis, the amount was properly within its income of that year. There is no foundation for an estoppel against petitioner’s claim to that effect, and no reason for taking this item out of the petitioner’s accrual system and, by treating it on a cash basis, including it in income of 1937 when it was received. This is simply to leap over the statute of limitations. I confess that- the Court’s decision is equitable and that the taxpayer is perhaps attempting to escape a tax which in good conscience it should pay; but to sustain that equitable deficiency the opinion adopts an impractical standard of accrual, i. e., that of judgment as to the probabilities of collection. But even if the standard be adopted, I think the evidence does not justify the omission of the item from accrued interest of 1934, by either the taxpayer or the Commissioner.

TURNER, agrees with this dissent.