Charles F. Kahler v. Commissioner

Brief Fact Summary. The findings of facts are omitted from the text. Petitioner received a commission check on December 31, 1946. Petitioner argued that the income from the check should be counted in tax year 1947, not 1946.

Synopsis of Rule of Law. All items of gross income shall be included in the taxable year in which they were received by the taxpayer.

Facts. The finding of facts is omitted from the text. Petitioner received a commission check on December 31, 1946 and argues that the income should be counted for tax year 1947. Petitioner received the check after banking hours at ended on the last day of the tax year.

Issue. When did Petitioner realize income represented by the commission check?

Held. Judge Rice issued the opinion for the Tax Court in holding that the income should be realized on the day Petitioner received the check even if it could not have been cashed that day.

Concurrence. Judge Murdock issued a concurring opinion, joined by Judge Harron, pointing out that the Petitioner’s case was weaker than observed by the majority. He believes Petitioner may have been able to use some other bank or cash it elsewhere.

Discussion. The Tax Court notes that the check was not subject to any restrictions which may have justified not considering as income until the following year. In the Court’s view it was immaterial that Petitioner was not able to cash the check because the bank was closed.