Thor Power Tool v. Commissioner of Internal Revenue

PETITIONER: Thor Power Tool
RESPONDENT: Commissioner of Internal Revenue
LOCATION: Vineville Presbyterian Church

DOCKET NO.: 77-920
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 439 US 522 (1979)
ARGUED: Nov 01, 1978
DECIDED: Jan 16, 1979

ADVOCATES:
Mark H. Berens - for petitioner
Stuart A. Smith - for respondent

Facts of the case

Question

Media for Thor Power Tool v. Commissioner of Internal Revenue

Audio Transcription for Oral Argument - November 01, 1978 in Thor Power Tool v. Commissioner of Internal Revenue

Audio Transcription for Opinion Announcement - January 16, 1979 in Thor Power Tool v. Commissioner of Internal Revenue

Warren E. Burger:

The judgment and opinion of the Court in Thor Power Tool against the Commissioner of Internal Revenue will be announced by Mr. Justice Blackmun.

Harry A. Blackmun:

Well, this is a federal income tax case and it comes to us from the United States Court of Appeals for the Seventh Circuit.

That Court has had the United States' Tax Court before it decided the issues in favor of the Commissioner of Internal Revenue and against the corporate taxpayer.

There are two issues involved.

One has to do with the amount of an addition by an accrual basis taxpayer to a reserve or bad debts.

And the other concerns inventory write-downs when the taxpayer concludes that its inventory is excessive.

These obviously are not issues of such public interest as to merit extended comment here but they are of definite concern to accountants and to those who administer the income tax laws.

It will suffice to say that in an opinion filed today the Court unanimously affirms the judgment of the Court of Appeals.

We hold that the Commissioner did not abuse his discretion when he ruled that the inventory write-down effectuated by the taxpayer did not reflect income clearly for income tax purposes.

And also that he did not abuse his discretion when he disallowed in part the taxpayer's addition to its bad debt reserve.

In reaching these conclusions we emphasize that what may be appropriate for accounting purposes does not necessarily govern for income tax purposes.

Warren E. Burger:

Thank you Mr. Justice Blackmun.