Schuessler v. Commissioner
United States Court of Appeals for the Fifth Circuit
230 F.2d 722 (1956)
Relevant factsFree
Schuessler (plaintiff), an accrual-method furnace seller, sold 665 gas furnaces in 1946, each accompanied by a five-year guarantee to turn the furnace on and off for the purchaser at an estimated cost of at least $2.00 per visit; this guarantee let Schuessler charge $20-25 more per furnace than competitors. To cover the future obligation, Schuessler set aside a $13,300 reserve fund in 1946 and deducted that entire amount on its 1946 tax return, but the Tax Court disallowed the deduction.
IssueFree
Whether an accrual method taxpayer may deduct future expenses in the year of accrual if the expense is reasonably ascertainable.