
    Farrelly-Walsh, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 10938.
    Promulgated October 11, 1928.
    
      Daniel J. Hannefm. for the petitioner.
    
      James A. O'Cdllaghan, Esq., for the respondent.
   Siefkin :

This is a proceeding for the redetermination of a deficiency in income and profits taxes for the years 1921 in the amount of $612.90. The facts are not in dispute, the allegations of the petition being admitted by the answer of the respondent.

The petitioner corporation leased certain premises for a five-year term from August 1, 1919, for a rental of $100 a month. On March 15,1921, the lessor, in order to regain possession of the premises, paid to the petitioner $18,250 to cancel and surrender the lease and vacate the premises. As the result of canceling the lease and vacating the premises, the petitioner incurred expenses of $7,813.66. On its return for 1921, petitioner allocated $11,436.34 over the period from March 15, 1921, to July 31, 1924, and reported as income for 1921 only the proportionate amount of such total, or $2,226.29. In arriving at the deficiency, however, the respondent included the entire amount of $11,436.34 as taxable income for 1921.

The situation is different from that considered in Henry B. Miller, 10 B. T. A. 383, where we were passing upon the question as to the deduction of the amount paid to obtain surrender of a lease. Here we have a question of income, and the transaction having been completed by the vacation of the premises and the receipt of the net amount of money by the petitioner in 1921, there is nothing which would prevent the entire amount being included as income in that year even if the petitioner were on an accrual basis, as to which the record is silent. See August Merckens, 7 B. T. A. 32; Cf. Flaxlinum Insulating Co., 5 B. T. A. 676.

Judgment will be entered for the respondent.  