1959 U.S. Tax Ct. LEXIS 37 | Tax Ct. | 1959
Lead Opinion
OPINION.
The Commissioner determined a deficiency in income tax in the amount of $379,848.55 for the calendar year 1952. The parties have filed a comprehensive stipulation of facts, and although some testimony was received, it does not appear to be necessary to make any findings beyond the stipulation which we hereby adopt as our findings of fact.
Petitioner, an accrual basis taxpayer, sold its products on installments, and arranged for financing by transferring its customers’ credit purchase notes to certain financing agencies without recourse. The financing agencies withheld a portion of the purchase price, until certain events occurred. The amounts thus withheld were placed in a dealer’s reserve account together with a portion of the finance charges paid by petitioner’s customers. The question for decision is whether petitioner was required to report in its 1952 returns the sum of $592,615.23 thus credited to it in dealer’s reserve accounts during 1952.
A conflict on this issue among the lower courts has recently been resolved by the Supreme Court in Commissioner v. Hansen, 360 U.S. 446. Decision in the present case was delayed pending the decision of the Supreme Court in the Hansen case. However, almost immediately after that decision petitioner requested and was granted permission to file a supplemental brief.
In its supplemental brief, petitioner seeks to draw certain distinctions between that case and the instant case. In contrast to most of the assignments involved in Hansen,
Petitioner also argues that the portion of the reserves comprised of “finance charges” allowed by the finance companies — as distinguished from the portion of the reserves attributable to “holdbacks” on the purchase price of the notes — was not accruable as income at the time the notes were sold, but only as “earned.” This issue was raised in Hansen, but the Court held against the taxpayers for failing to sustain their burden of proof with respect thereto. Similar contentions regarding special treatment for “finance charges” credited to dealer’s reserve accounts have been rejected in Shoemaker-Nash, Inc., 41 B.T.A. 417; Arthur V. Morgan, 29 T.C. 63, on appeal (C.A. 9); and Wiley v. Commissioner, 266 F. 2d 48 (C.A. 6), affirming a Memorandum Opinion of this Court, certiorari denied 361 U.S. 831. See Hine Pontiac v. United States, supra, which involved credits to reserves in the amount by which interest and finance or service charges exceeded the specified rate of discount in the contract. We see no basis for reaching a different result in the present case.
Decision will he entered for the respondent.
In Commissioner v. Clover, decided sub nom. Commissioner v. Hansen, 360 U.S. 446, some notes were assigned without recourse and others with full recourse.