1953 U.S. Tax Ct. LEXIS 204 | Tax Ct. | 1953
Lead Opinion
OPINION.
The petitioner owned and supplied its customers with containers for its béer. Its plan was not to sell the containers but to have them returned, so it required the customers to make a deposit with it for each container as it went out full of beer to the customer, and it refunded the equivalent of the deposits as empty containers were returned to it. The present question would not have arisen if the above system had worked perfectly, that is, if all containers had been returned. The record shows, however, that not all containers were returned and, as the deposits exceeded the disbursements in the reserve for returnable containers account in almost all years and the reserve for possible disbursements increased, it became obvious that many containers would never be returned, and the petitioner, which meanwhile had mingled the deposits with its other funds, would never be called upon to refund or disburse a substantial portion of the bookkeeping reserve. This indicates that the petitioner had parted with some containers and had received money for them which it would not have to repay. The deposits were a pledge or security for the return of the containers and it was an important inherent part of the arrangement that the deposit would be forfeited to compensate the petitioner to some extent for the loss if the containers were not returned. That money represented income to the petitioner for Federal income tax purposes since the petitioner was recovering or had recovered the cost of the containers through depreciation deductions.
Decision will be entered for the respondent.
Breakage and loss undoubtedly entered Into tbe computation of those deductions.
The average for the whole period here shown was 1.15+ per cent.