Angelus Funeral Home v. Commissioner of Internal Revenue

Taxpayer-Petitioner Angelus Funeral Home seeks review of a decision of the Tax Court, 47 T.C. 391 (1967), upholding the Commissioner’s determination of certain income tax deficiencies against it for the year 1961. The sole question raised is whether Angelus must treat as income in the year of receipt payments made to it pursuant to a “pre-need funeral plan arrangement.” The Tax Court held that it must. We affirm.

Angelus is a California corporation engaged in the business of providing funeral and burial services. It files its income tax returns on a calendar year, accrual basis. As a part of its business operations during the years 1954 and continuing through 1961, Angelus entered into written contracts with individuals. Each agreement, called a “Pre-Need Funeral Plan Agreement”, provided for payment by the individual of a small down payment at the signing of the contract, and for voluntary payments of additional small amounts each month until a set sum was reached. Angelus agreed that when the individual died it would apply the total amount paid toward the cost of the individual’s funeral. If the individual died at a place where Angelus could not perform its services, Angelus…