Pine v. Commissioner

*555 This proceeding is for the redetermination of a deficiency in income tax asserted by the respondent for the year 1922 in the amount of $4,522.11. The petitioner alleges that the respondent erred in failing to allow as a deduction from gross income the entire amount of freight charges on merchandise paid by the petitioner during the taxable years.

FINDINGS OF FACT.

The petitioner is an individual engaged in selling lumber, coal and building supplies at Camden, N.J. In the year 1922 he purchased, f.o.b. his own yards, lumber on which the freight *556 charges amounted to $23,921.60. He paid said freight charges and remitted to the shipper the difference between the invoice price of the lumber and the amount of the freight charges. The lumber was included in inventory at the full invoice price. The freight charges paid were entered on the petitioner's books as allowances from shippers, and were reported in his return for 1922 as income. As an offsetting entry on the return the petitioner made a fictitious deduction under the heading, *2565 "Other Deductions Authorized by Law." The respondent disallowed the deduction.

OPINION.

MARQUETTE: The facts in this proceeding speak for themselves. It is clear that the petitioner overstated his gross income on his return by the amount of $23,921.60, and that he attempted to compensate therefor by a fictitious deduction under item 16 of the return. The respondent properly disallowed the deduction, but the result is that the petitioner's net income as determined by the respondent is excessive to the extent of $23,921.60. Both the deduction and the amount erroneously reported as income should be eliminated from the return.

Judgment will be entered under Rule 50.