Rogan

Taxpayer, Commercial Discount Company, a California corporation, brought suit for a refund against the Collector of Internal Revenue to recover corporate income tax and interest paid by it for the calendar year of 1934. Both parties agree that during that year the taxpayer suffered a loss on one transaction in excess of $124,-000, and this controversy is over that item on which taxpayer claims it improperly paid taxes. Claim for the refund was filed in March, 1938. The District Court entered judgment on the claim against the defendant Collector, and the Government seeks review.

At all times pertinent to this inquiry, the taxpayer was operating under the reserve method for handling bad debts and did not employ the charge-off method. The statute allows these alternative methods, but having made an election as to which method it would adopt, it could not change to the other method in the absence of the Commissioner’s express permission. See footnote 1 for reference to statute and regulations. Also Athol Mfg. Co. v. Commissioner of Internal Revenue, 1 Cir., 54 F.2d 230 . Nor can it adopt, for the purposes of this suit, the status of a taxpayer operating under the system of annually…