Tiller-Glenn Co. v. Commissioner

TILLER-GLENN COMPANY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Tiller-Glenn Co. v. Commissioner

Docket No. 6973.

United States Board of Tax Appeals

4 B.T.A. 1051; 1926 BTA LEXIS 2105;

September 25, 1926, Decided

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Accounts neither ascertained to have been worthless nor charged off the petitioner's books of account in the taxable year are not deductible from gross income.

George T. Adams, Esq., for the petitioner.

J. Arthur Adams, Esq., for the respondent.

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SMITH

This is a proceeding for the redetermination of a deficiency in income and profits tax for the year 1919 in the amount of $396.45, arising from the disallowance of a deduction from gross income of alleged bad debts aggregating $667.25.

FINDINGS OF FACT.

The petitioner is a Georgia corporation with its place of business at Carlton. It is engaged in the general mercantile business; it also operates a garage and deals in fertilizers. It does a large credit business. At the close of 1919 it determined that certain of its accounts were worthless and charged them off its books of account. It did not, however, make an exhaustive examination of its accounts receivable for the purpose of determining worthless accounts. Subsequent to 1919, it determined that eleven accounts receivable, aggregating $667.25, were worthless on December 31, 1919. These accounts had not been charged off the petitioner's books of account subsequent to the year 1919. In the reaudit of the return the Commissioner has refused to allow a deduction from gross income of alleged bad debts in the amount of $667.25 upon the ground that they were neither ascertained to be worthless nor charged off the petitioner's books of account within the year 1919.

OPINION.

SMITH: In this proceeding the petitioner claims the right to deduct from gross income $667.25 for bad debts which it claims were worthless on December 31, 1919. They have never been charged off the petitioner's books of account. The taxing statute permits the petitioner to deduct from gross income "debts ascertained to be worthless and charged off within the taxable year." Section 234(a)(5). The evidence shows that the petitioner made no ascertainment of the worthlessness of the eleven accounts receivable, totaling $667.25, during the year 1919, and that it did not charge them off its books of account during that year.

Judgment for the Commissioner.