
    D. L. Wheelock, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 7974.
    Promulgated February 6, 1928.
    
      Ray G. Ransom, G. P. A., for the petitioner.
    
      P. M. Glarh, Esq., for the respondent.
   OPINION.

Lansdon :

The only controversy here relates to the year in which operating expenses which the parties agree are deductible from gross income shall be so deducted. There is no dispute. over the facts. The petitioner is a member of a contracting partnership that keeps its books on the closed-job basis, as set forth in onr findings of fact. The respondent contends that the expenses in question should be deducted from gross income in the respective years in which they are charged to profit and loss. The petitioner maintains that regardless of the methods of bookkeeping employed by the partnership, expenses are deductible from income in the year in which they are paid or incurred.

The administrative regulations permit contractors to make their returns on the so-called closed-job or long-time-contract basis, on the theory that it is only when a project is completed and payment therefor received that income can be determined. The petitioner’s contention in effect is that the partnership is entitled to deduct expenses as incurred, regardless of when resulting income is realized. We are not able to adopt this view. The partnership, having decided to keep its books on a basis that takes income into profit and loss only as and when projects are completed, we think that the expenses incident to the production of such income are deductible at the same time.

Reviewed by the Board.

Judgment will be entered for the respondent.

Steenhagen concurs in the result only.  