United States Supreme Court Cases & Opinions

U.S. Supreme Court

United States v. Olympic Radio & Television, Inc., 349 U.S. 232 (1955)

United States v. Olympic Radio & Television, Inc.

No. 10

Argued April 18-19, 1955

Decided May 23, 1955

349 U.S. 232

Syllabus

Under § 122(d)(6) of the Internal Revenue Code, a taxpayer on the accrual basis cannot, in computing its net operating loss for one year, deduct the amount of excess profits taxes which were paid in that year but which had accrued in an earlier year. Pp. 349 U. S. 233-236.

(a) Section 122(d)(6) does not grant the taxpayer an option to take deductions on a basis that is inconsistent with the method of accounting which it employs. Pp. 349 U. S. 234-235.

(b) The question of what deductions are permissible under the Internal Revenue Code is not controlled by general equitable considerations. P. 349 U. S. 236.

(c) The phrase "paid or accrued" is not to be given a different meaning for the purposes of § 122(d)(6) than it has in other parts of the same chapter of the Code. P. 236.

(d) The construction here given § 122(d)(6) is in harmony with the general rule that a taxpayer on the accrual basis must take deductions in the year of accrual. P. 349 U. S. 236.

(e) If the fact that a provision of the tax law favors the taxpayer on the cash basis and discriminates against the taxpayer on the accrual basis suggests that changes in the law are desirable, it is for Congress, not the courts, to make them. P. 349 U. S. 236.

124 Ct.Cl. 33, 39, 108 F.Supp. 109, 110 F.Supp. 600, reversed.

Page 349 U. S. 233