April 23, 1959.
Charles K. Rice, Arch M. Cantrall, Lee A. Jackson and Harry Baum, by George W. Beatty, Dept. of Justice, Washington, D.C., for petitioner.
Arnold F. Bunge and James F. Kennedy, Jr., of Marshall, Melhorn, Bloch Belt, Toledo, Ohio, for respondent.
Before MARTIN, Chief Judge, and BOYD and CHOATE, District Judges.
This tax review has been heard and considered on the oral arguments of attorneys for the contending parties and on the appendix record in the case.
Briefly stated, the salient facts are that the board of directors of the respondent corporate taxpayer adopted a resolution in the latter part of 1953, directing the payment of $33,750 to a totally disabled salesman-employee (or, in the event of his death, to his widow) as a substitute for a policy of insurance on the salesman's life which it had unsuccessfully attempted to secure under a pension plan; and the Tax Court considered that the authorized payment by the corporate taxpayer to its employee was an unconditional obligation to pay a business expense upon the adoption of the resolution by the directors on December 16, 1953. The court considered that the obligation became then "accrued", as the taxpayer, during 1953, had kept its books and reported its income in compliance with the accrual method of accounting.
The United States Tax Court held that, in the circumstances of the case, the authorized payment to respondent's employee was a deductible business expense for the year 1953, although the sum authorized to be paid was payable to the employee in sixty equal semi-monthly instalments, beginning January 15, 1954.
We believe that the tax court reached a correct result, upon the basis of its findings of fact and opinion. Accordingly, its decision is affirmed.