Spring City Foundry Co. v. Commissioner, 292 U.S. 182 (1934)

Please note: this case begins in mid-page. It therefore shares a citation with the last page of the previous case. If you are attempting to follow a link to the last page of 292 U.S. 151, click here.

Spring City Foundry Co. v. Commissioner

Nos. 727 and 728

Argued April 3, 1934
Decided April 30, 1934
292 U.S. 182

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

1. Where accounts and income tax returns are on the accrual basis, a debt owing the taxpayer for goods sold in the tax year is returnable as gross income of that year even though ascertained in that year to be partly worthless. Art. 35 of Regs. 45, under Revenue Act of 1918, construed. P. 184.

2. Section 234(a)(5) of the Revenue Act of 1918 authorized the deduction of a debt ascertained to be worthless and charged off within the taxable year; it did not authorize the deduction of the whole or a part of a debt which was not then ascertained to be worthless, but was recoverable in part, the amount that was recoverable being still uncertain. P. 185.

3. Section 234(a)(4) of the Revenue Act of 1918, providing for deduction of "losses sustained during the taxable year," and subdivision (5) of the same section providing for deduction of debts ascertained to be worthless within the taxable year, are mutually exclusive, and a debt excluded from deduction under (5) cannot be deducted as a loss under (4). P. 189.

4. If a statute is ambiguous, administrative construction followed since its enactment is of great weight. P. 189.

67 F.2d 385, 387, affirmed.

Certiorari, 291 U.S. 656, to review judgments reversing an order of the Board of Tax Appeals, 25 B.T.A. 822, allowing deduction of part of a debt in an income tax assessment for the year 1920. Both the taxpayer and the Commissioner appealed to the court below.