*2860 Held, that an amount of $2,214.12 representing an adjustment on a fire which occurred in 1920 was erroneously included in income for 1921.
*413 In this proceeding the petitioner seeks a redetermination of its income-tax liability for the calendar year 1921, for which period the respondent has determined a deficiency of $221.41.
The petitioner contends that the respondent erred in including in its net taxable income the sum of $2,214.12, which represents the sum received by the petitioner in payment of a loss caused by fire in the previous year.
FINDINGS OF FACT.
The Worstell Co., Ltd., is a corporation organized under the laws of the State of Idaho, with its principal place of business at Wallace.
Since 1909 the petitioner has been the owner of a two-story-and-basement brick building used in connection with its furniture and undertaking business. In September, 1920, a fire occurred in the basement of this building, causing considerable damage both to the building and the merchandise. Insurance in the amount of $6,972.34 was paid in January, 1921. Of this amount, $4,758.22 represented*2861 an adjustment on account of merchandise destroyed and $2,214.12 represented an adjustment on account of the damages to the building. The petitioner at the close of 1920 accrued the $4,758.22 item, but did not accrue the damages to the building. This resulted in showing an increase in income of $2,214.12 for 1921.
*414 OPINION.
GREEN: The respondent has determined that the petitioner received income in 1921 in the amount of $2,214.12 from a fire which occurred in 1920. The record does not disclose that the insurance companies contested the payments on their policies and any gain or loss resulting from the fire should be returned or reported in the year in which the fire occurred. The record shows that while the payments of the losses sustained as to merchandise and building were not made until January, 1921, the losses were actually sustained in September, 1920. The receipt of an item in 1921 representing an adjustment of a fire loss in 1920 is not income in the year 1921, and the respondent's determination to that effect is erroneous. The petitioner's net income as determined by the respondent should be reduced by the amount of $2,214.12.
Judgment will be entered*2862 under Rule 50.