Kain v. Commissioner

Memorandum Opinion

OPPER, Judge: Respondent determined a deficiency of $14,041.30 in petitioner's 1945 income tax, not all of which is in controversy. The sole issue is whether expenditures in excess of O.P.A. ceiling prices are includible as costs of goods sold in computing petitioner's gross income.

All of the facts are stipulated and are hereby found accordingly. The stipulation is substantially as follows:

"1. The petitioner filed her income tax return for the calendar year 1945 with the Collector of Internal Revenue for the 3rd New York District.

"2. Petitioner concedes the adjustment made in the notice of deficiency in the amount of $3,000.00 for traveling and entertaining expenses.

"3. Petitioner during 1945 was engaged in the business of manufacturing and selling dresses under the trade name of 'Kaymode Dresses.' During that year petitioner bought cotton piece goods at prices in excess of Office of Price Administration ceiling prices * * * in the amount of $14,350.24.

"4. It is agreed, if called as a witness, petitioner would*204 testify that, at the time the purchases * * * were made, she did not know the amounts paid were in excess of O.P.A. ceiling prices.

"5. The cotton goods purchased by the petitioner were 'fine cottons' and were governed by Maximum Price Regulation 127 * * *."

Respondent makes no effort to distinguish , appeal dismissed and affirmed (C.A. 5), Feb. 20, 1950, and apparently concedes by implication that the questions are identical. On authority of that case the determination must be viewed as erroneous in this respect.

Decision will be entered under Rule 50.