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Commissioner v. South Texas Lumber Co., 333 U.S. 496 (1948)

Commissioner of Internal Revenue v. South Texas Lumber Co.

No. 384

Argued January 14, 1948

Decided March 29, 1948

333 U.S. 496


1. A corporate taxpayer which filed its federal income and excess profits tax return on the accrual basis, but elected to report income from certain installment sales on the installment basis, as authorized by § 44 of the Internal Revenue Code, may not, in computing its excess profits tax credit under § 714, include in "invested capital" (as "accumulated earnings and profits") the unrealized and unreported profits from such installment sales. Pp. 333 U. S. 497-506.

2. The provision of § 29.115-3 of Treasury Regulations 111, applicable to excess profits tax as well as to income tax, that "a corporation computing income on the installment basis as provided in § 44 shall, with respect to the installment transaction, compute earnings and profits on such basis," is valid. Pp. 333 U. S. 500-503.

3. Treasury Regulations constitute contemporaneous constructions of the revenue statutes by those charged with the administration of these statutes, and should not be invalidated except for weighty reasons. P. 333 U. S. 501.

4. The provision of § 29.115-3 of Treasury Regulations 111 here in question is not in conflict with §§ 115(1), 111, 112, and 113 of the Internal Revenue Code. Pp. 333 U. S. 504-506.

162 F.2d 866, reversed.

The Commissioner's redetermination of respondent's income and excess profits tax was sustained by the Tax Court. 7 T.C. 669. The Circuit Court of Appeals reversed. 162 F.2d 866. This Court granted certiorari. 332 U.S. 829. Reversed, p. 333 U. S. 506.

Page 333 U. S. 497

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