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Spring City Foundry Co. v. Commissioner

Citation. Spring City Foundry Co. v. Commissioner, 292 U.S. 182, 54 S. Ct. 644, 78 L. Ed. 1200, 4 U.S. Tax Cas. (CCH) P1276, 13 A.F.T.R. (P-H) 1164, 1934-1 C.B. 281, 1934 P.H. P1150 (U.S. Apr. 30, 1934)
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Brief Fact Summary.

Petitioner sold goods to a customer on an open account annually. Before the end of the year, the customer went bankrupt and Petitioner was not paid the full amount owed.

Synopsis of Rule of Law.

In manufacturing, merchandising, or mining, gross income means the total sales, less the cost of goods sold, plus any income from investments and from incidental or outside operations or sources.


Petitioner sold goods in 1920 on an open account. The purchaser went bankrupt and a receiver was appointed, and Petitioner was not going to be paid in full for the goods. Petitioner contended that the because of the bankruptcy the gross income was now affected, and the debt should not be included in gross income.


Is the full amount of the sales includible in gross income even though Petitioner has not actually received payment?


Chief Justice Hughes delivered the opinion for the Supreme Court of the United States in holding against Petitioners and finding that the right to receive the fixed amount is includible in gross income.


It is the right to receive and not the actual receipt that determines inclusion in gross income. When the right to receive is a fixed amount, then the right accrues and is includible in gross income.

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