ABANDONMENT. See DEPRECIATION, IV, 22; V, 3, 12, 13; LOSSES, II,
ABATEMENT CLAIMS. See JURISDICTION, V.
ABNORMALITY. See INVESTED CAPITAL, XIV.
ACCELERATED DEPRECATION. See DEPRECIATION, IV, 24.
Accrual or cash. See II, infra; COMPENSATION, 2; CONTRACTS, 3, 4;
CREDITS, 2, 3, 5; EXPENSES, II; V, 5-13; GAIN OR LOSS, I, 13, 19;-
INTEREST, I, 3-5; II, 3-5; INVENTORIES, III; LOSSES, I, 1-4; PARTNERS,
II, 1, 3; TAXES, III (2).
Books. See ACCOUNTING; BAD DEBTS, I; COMPENSATION, 2; EVIDENCE,
II, 1, 3; VII, 1; EXPENSES, V, 5-13; INVENTORIES; INVESTED CAPITAL,
V, 2; NET INCOME; PARTNERS, I, 2; II, 1, 6.
Charging off bad debts. See BAD DEBTS.
Computation. See ACCOUNTING; CAPITAL GAIN; CREDITS; DEPLETION;
DEPRECIATION; ESTATE TAX; EXCESS PROFITS TAX; GAIN OR LOSS;
INSTALLMENT SALES; INVENTORIES; INVESTED CAPITAL; LOSSES; NET
INCOME; NET LOSSES; PARTNERS; RATES.
Constructive receipt. See II, 10, infra; COMPENSATION, 2; GAIN OR
Loss, I, 14; INTEREST, I, 2.
RESERVES. See BAD DEBTS, IV; EXPENSES, II (3); INSURANCE, 2-8;
INVESTED CAPITAL, I, 4; LOSSES, I, 2-4.
Book Entries; Errors. Tax liability may not be determined upon mere bookkeeping entries; hence erroneous accounting can not have effect of increasing or decreasing income or invested capital. Krieg Tanning Co-II. METHODS OF ACCOUNTING.
1. Predominant Method. Where books were kept partly on cash basis and partly on accrual basis and accrual method more closely approached that predominating in taxpayer's system, exercise of Commissioner's discretionary power in computing net income on accrual basis held proper. Maine Dairy Co---
2. Reflection of Income. Taxpayer's accounting method held clearly to reflect income within Act 1918, sec. 212, so far as commissions paid on foreign flour sales were concerned, so as to authorize deduction of such commissions, it being immaterial whether method was peculiar to taxpayer or a generally recognized method of accounting between principal and agent. Raymond-Hadley Corp---
3. Id. Sales; Transfer of Title. Whether accounting practice on accrual
basis fairly reflected income from sugar sales held not controlled by
transfer of title under contracts of sale, transfer of title being only one
of elements for consideration. Amalgamated Sugar Co-‒‒‒‒
4. Id. Where accounting practice of seller of fungible goods was to
accrue price fixed by sales contracts as income in year in which contract
was made and all parties in trade regarded title as passing when con-
tract was made and not when goods were delivered and paid for, such
practice correctly reflected taxpayer's income. Id.
(2) Accrual or Cash. See II (1), supra.
5. Evidence of Basis. Where it is clear that accrual system was
used generally in keeping accounts of partnership, the fact that certain
items, such as interest receivable and prepaid insurance, were not
accrued, and that weekly pay roll was not adjusted as of last day of year,
is insufficient to place partnership on cash basis. John F. Cook
6. Id. Partners who keep no individual books can not be said to be
on accrual basis merely because they had personal accounts on books of
partnership which was on accrual basis, and salaries received by them
from a corporation and loaned to partnership and charged on its books to
their personal accounts are taxable to them in year of receipt. Id.
7. Id. Commissioner's action in including entire profit from construc-
tion contract in income for year in which contract was completed,
approved for want of evidence establishing that taxpayer was on cash
basis and proof of amounts actually received under contract in taxable
years. J. R. Vansant__
8. Change in Method. Where taxpayer had acquired shop supplies and
insurance policies for cash prior to tax year, which were charged to
operating expense, and changed from cash to accrual basis at beginning
of tax year, inventory of supplies on hand and cost of unexpired insurance
at that time should be included in gross income for tax year. Alameda
Steam Laundry Assn---.
9. Accounts Receivable. Where accounts were kept on accrual basis
and evidence disclosed an increase in accounts receivable for tax year.
such increase should be included in income for that year. Maine Dairy
Co.----
10. Claims; Litigation; Payment to Attorney. Where payments were
made to attorney in settlement of claim of his client and attorney retained
part thereof to secure payment of his fees and expenses, and client was
on cash basis, held, only amounts actually paid over to client were tax-
able income to him in year of payment. A. L. Voyer__
11. Commissions. Where books were kept and returns were made on
accrual basis, commissions constitute income in year in which they were
earned, irrespective of year in which they were collected. John F. Cook
III. PERIODS OF ACCOUNTING. See NET LOSSES; RETURNS, III, 5, 6.
Taxable Year. Under Act 1921, sec. 226 (c), there is a distinction be-
tween a fiscal period of less than 12 months and a taxable year. Statute
provides different methods for computing tax in each instance, so that
fiscal period constituting time elapsing between close of a former fiscal
year and date designated as close of a new fiscal year is not a taxable
year. Arthur Walker & Co----
ACCOUNTS PAYABLE. See INVESTED CAPITAL, II.
ACCOUNTS RECEIVABLE. See ACCOUNTING, II, 9; BAD DEBTS; Ex-
PENSES, II, 6; INVENTORIES, 1, 2; INVESTED CAPITAL, XII, 2; XV, 2.
ACCRUAL. See ACCOUNTING, II; COMPENSATION, 2; CONTRACTS, 3. 4;
CREDITS, 2, 3, 5; EXPENSES, II; V, 5–13; GAIN OR Loss, I, 13, 19; INTER-
EST, I, 3-5; II, 3-5; INVENTORIES, III; LOSSES, I, 1-4; PARTNERS, II, 1, 3;
TAXES, III (2).
ADMINISTRATION. See ESTATE TAX; ESTATES AND TRUSTS.
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