Appeal of Rex Machinery & Supply Co.

OPINION.

SteRNhagen:

The deduction in 1919 of $1,008.10, paid by the taxpayer in 1920 to Lord in reimbursement of his income tax for 1919, was properly disallowed by the Commissioner. The liability of the corporation was in effect one of indemnity, and clearly it could not precede the liability of Lord for the tax. This, in accordance with our decision in the Appeal of L. S. Ayers & Co., 1 B. T. A. 1135, accrued in 1920 as to Lord, and we are of opinion that it did not accrue prior thereto as to the corporation. Even though it were not a contract of indemnity, the liability did not accrue until the succeeding taxable year. Appeal of Norwich & Worcester R. R. Co., 2 B. T. A. 215; Appeal of American Telegraph & Cable Co., 2 B. T. A. 991.

The circumstances existing during the taxable year disclose, in our opinion, such an abnormal condition as to bring the taxpayer within the terms of section 327 of the Bevenue Act of 1918. The Commissioner should apply the provisions of section 328 of said Act and his computation thereunder shall be deemed final, since the taxpayer introduced no . evidence with respect to comparatives. Appeal of H. T. Cushman Manufacturing Co., 2 B. T. A. 39.