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Birren v. Commissioner of Internal Revenue.

December 7, 1940

P. A. BIRREN & SON, INC.,
v.
COMMISSIONER OF INTERNAL REVENUE.



Petition by P. A. Birren & Son, Incorporated, for review of decision of the United States Board of Tax Appeals redetermining a deficiency in petitioner's income tax imposed by the Commissioner of Internal Revenue.

Author: Kerner

Before MAJOR and KERNER, Circuit Judges, and LINDLEY, District Judge.

KERNER, Circuit Judge.

Petitioner, P. A. Birren & Son, Inc., seeks review of a decision of the Board of Tax Appeals redetermining a deficiency in petitioner's income tax for the year 1933 in the amount of $1,391.15. The original deficiency determined by the Commissioner was $3,087.34, but was reduced to $1,391.15 upon redetermination by the Board pursuant to concessiosn made by the Commissioner at the hearing before the Board.

Petitioner was transferee of the undertaking business of P. A. Birren who had commenced this business about 1885. P. A. Birren, in filing his income tax returns during the years he conducted his business, reported as sales the accounts collected instead of the sales or services charged, although in the cost of sales reported were included the cost of caskets and other materials and payments for services incident to his business. Birren, prior to 1925, kept a single entry system of bookkeeping, and thereafter he installed a double entry system, on the accrual basis.

On May 1, 1933, petitioner was incorporated and took over this undertaking business, issuing its capital stock therefor of a par value of $25,000 for the following assets:

Cash $1,955.54

Accounts Receivable $30,938.40

Less Reserve 14,938.40 16,000.00

Merchandise Inventory 396.91

Furniture and Fixtures 3,500.00

Automobiles 3,147.55

Total $25,000 .00

For these assets 980 shares out of a total of 1,000 shares of the capital stock of the P. A. Birren & Son, Inc., were issued to P. A. Birren ...


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