Commissioner v. Boylston Market Ass'n
United States Court of Appeals for the First Circuit
131 F.2d 966 (1942)
Boylston Market Association (plaintiff), a real estate management company, regularly bought multi-year prepaid insurance policies and prorated its deductions to match the amount allocable to each tax year, rather than deducting the whole premium when paid. The Commissioner (defendant) disallowed those prorated deductions, insisting Boylston could deduct only the actual cash amount paid in each specific tax year, relying on an earlier decision going the other way that had let a different taxpayer fully deduct multi-year prepaid insurance in the year of purchase.
Whether prepaid insurance is a capital expense that must be capitalized and deducted ratably over the period of coverage.