Anderson-Harrington Coal Co. v. Commissioner

OPINION.

Van FossaN :

Section 234(a) of the Revenue Act of 1921 provides, in part:

That in computing the net income of a corporation subject to the tax imposed by section 230 there shall bo allowed as deductions:

* * * * * * *

(5) Debts ascertained to be worthless and charged off within the taxable year (or in the discretion of the Commissioner, a reasonable addition to a reserve for bad debts) * * *.

The officers of this petitioner knew most of its customers and had personal knowledge of their affairs and financial circumstances. In the light of this knowledge the debts in question were ascertained to be worthless and were charged off within the taxable years. We think that the petitioner has complied with the requirements of the law and is entitled to the deductions claimed. Nor is it fatal to the contention of petitioner that it sold merchandise, for cash, to certain customers whose accounts remained unpaid or had been written off as worthless. Appeal of Midland Coal Co., 1 B. T. A. 311.

The respondent erred in disallowing the deduction of bad debts in the sum of $5,424.02 for the year 1921 and in the sum of $2,142.33 for the year 1922.

Judgment will be entered for the petitioner.