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U.S. Supreme Court

Security Flour Mills Co. v. Commissioner, 321 U.S. 281 (1944)

Security Flour Mills Co. v. Commissioner of Internal Revenue

No. 276

Argued February 10, 1944

Decided February 28, 1944

321 U.S. 281


1. The rule that a taxpayer (on the accrual basis) may not accrue an expense the amount of which is unsettled or the liability for which is contingent is applicable to a tax the liability for which he denies and payment of which he is contesting. P. 321 U. S. 284.

2. In 1935, a taxpayer (on the accrual basis) made sales of flour at prices which included an amount sufficient to cover a federal processing tax. In the same year, the taxpayer obtained a temporary injunction against collection of the tax, on condition that the amount thereof be deposited pendente lite. In 1936, the tax was held invalid, and the impounded funds were returned to the taxpayer. Held that payments made by the taxpayer in 1936, 1937, and 1938 to reimburse customers for the amount of the tax on such sales were not deductible from gross income for 1935. Pp. 321 U. S. 283, 321 U. S. 285.

3. Section 43 of the Revenue Act of 1934, which requires that deductions be taken for the taxable year in which the amount was paid or accrued, "unless in order to clearly reflect income the deductions or credits should be taken as of a different period," does not authorize or require that deduction of the payments here in question be taken as of the taxable year 1935. Pp. 321 U. S. 284, 321 U. S. 287.

135 F.2d 165 affirmed.

Page 321 U. S. 282

Certiorari, 320 U.S. 724, to review the reversal of a decision of the Board of Tax Appeals, 45 B.T.A. 671, which set aside the Commissioner's determination of a tax deficiency.

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