Georgia State Sav. Asso. v. Commissioner

1926 BTA LEXIS 2212 | B.T.A. | 1926

Lead Opinion

OPINION.

Maequette

: Since the taxpayer’s books were kept on the cash receipts and disbursements basis, it is clear that interest due the taxpayer and uncollected at the close of any fiscal year, can not be considered as income for that year, but is income for the year in which collection is actually made. However, with reference to the interest on certificates of deposit, set forth in the findings of fact, we are of the opinion that payment thereof was not made on April 30, 1918, nor April 30, 1922, when the interest checks were drawn and mailed, but that such interest remained a liability to the taxpayer until the checks were actually presented at its banking house and there paid. The contracts under which the deposits were made provided that the interest thereon should be paid semi-annually on May 1st and November 1st of each year. The interest involved herein was due and payable May 1st, not April 30th. The taxpayer, although it drew the checks on April 30th, did not mail them until after the close of business on that date, so that they could not be presented for payment until on or after May 1st, and it made no entries on its books reducing cash, as it would have done if it had considered that payment was actually made. We consider that this transaction is entirely different from that in which the payor draws its checks on funds in another bank. The interest in question was payable on May 1st at the taxpayer’s banking house and, upon the presentation of the interest checks, they were paid and cash credited with the amount thereof.

For the reason stated we hold that the interest in question should not be deducted in computing the taxpayer’s net income for the fiscal years ended April 30, 1918, and April 30, 1922.

Order of redetermination will be entered on 10 days’ notice, under Rule 50.