BURNET, COMMISSIONER OF INTERNAL REVENUE, v. SANFORD & BROOKS COMPANY, 282 U.S. 359

Summary

Petitioner sought review of a judgment that reversed an order of the Board of Tax Appeals sustaining against respondent an income and profits taxes deficiency assessment for a certain tax year, pursuant to §§ 213(a), 230, 232, 233, and 234(a) of the Revenue Act of 1918 (Act), 40 Stat. 1057. The amount petitioner imputed as income arose from respondent's recovery of compensatory damages from United States (U.S.) for breach of warranty in connection with a contract suit in which respondent's costs and expenses under the contract exceeded the amount paid by U.S. The United States Supreme Court rejected respondent's contention that the recovery represented losses sustained in earlier years and was thus not includable as income in the year the payment was received. Rather, the Court ruled that under the provisions of the Act, and in light of the fact that respondent did not make its tax returns on the accrual basis and did not use the methods afforded for long-term contracts, the payment ...