Spenger

1. The stipulation entered into between the parties (Plaintiff’s Exhibit No. 1), and the exhibits annexed thereto, are adopted by the Court as its Findings of Fact as though fully set forth herein. A copy of the stipulation and its exhibits is annexed hereto.

Conclusions of Law

1. The Court has jurisdiction over the parties and of the subject matter of the suit.

2. In the claim for refund filed with the Commissioner (Exhibit 1 annexed to the Stipulation), and in the complaint (Paragraph 19), plaintiff contends that the total payment to W. O. Files should be allowed as a deduction in computing gross income as a cost of goods sold. During oral argument, at the conclusion of the trial, and in the Memorandum of Points and Authorities, however, plaintiff contended that it was irrelevant whether the payment to Files was a deduction for cost of goods sold in computing gross income under Int. Rev.Code § 22(a) (1939), 26 U.S.C.A. § 22 (a), or was a deduction from gross income as an expense of carrying on the business of the Frank Spenger Co. under Int.Rev.Code § 23(a) (1) (A) (1939), 26 U.S.C.A. § 23 (a) (1) (A). The payment to Files was in no event an expense under the latter section.…