
    Appeal of ACTON FARMS MILK COMPANY.
    Docket No. 4683.
    Decided September 22, 1926.
    Action of the Commissioner in denying a deduction for bad; debts, approved.
    
      J. K. Richardson, Esq., for the petitioner.
    
      J. W. Fisher, Esq., for the Commissioner.
    This proceeding has been brought for the redetermination of a deficiency in income and profits taxes for the year 1918 in the amount of $4,636.08. The proposed additional tax results from the disallowance of a deduction claimed on account of bad debts in that year of $16,365.13.
    FINDINGS OF FACT.
    The taxpayer is a Massachusetts corporation with its principal place of business at 534 Boston Avenue, Somerville, and is engaged in the sale of milk and cream at wholesale and retail. The taxpayer delivers its product on 23 or 24 regular routes and each route has an average from 250 to 300 customers. During 1915, 1916, and 1917, the taxpayer had not been attentive to the collection of accounts. of its customers for milk and cream delivered. On November 1, 1917, the taxpayer discharged its former bookkeeper and employed another to carefully check its accounts and install such new system of accounting for the milk and cream accounts as might be found necessary. The bookkeeper employed subsequent to November 1, 1917, had the drivers of milk wagons interview the customers who were delinquent in the payment of their accounts and, based upon the reports given him by the drivers but without any investigation or ascertainment on his own account, determined that $16,365.13 represented bad debts in 1918, and made appropriate entries on the books charging them off. In some instances the amount of some of the accounts charged off had not been included in the gross sale account or other account to the end that the profit therefrom would be included in the taxpayer’s net income.
   OPINION.

GReen

: There is no evidence as to the facts or data obtained by the drivers upon which the bookkeeper determined the debts were worthless. There is no evidence before us as to the years in which the debts were contracted, name and address of the debtors, or the amoimts of the debts owed by each, or that any definite steps were taken to verify the accuracy of the charge-off.- Proof that debts were charged off in a particular year raises no presumption that they were ascertained to be worthless in that year.

Judgment for the Commissioner.

Smith dissents.  