Columbus and Southern Ohio Electric Company, Petitioner, v. Commissioner of Internal Revenue, Respondent, 244 F.2d 79 (6th Cir. 1957)

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U.S. Court of Appeals for the Sixth Circuit - 244 F.2d 79 (6th Cir. 1957) April 25, 1957

Joseph S. Platt and Lawrence D. Stanley, Columbus, Ohio, for petitioner.

Charles K. Rice, John Potts Barnes, Claude R. Marshall, Lee A. Jackson, and Melva M. Graney, Washington, D. C., for respondent.

Before MARTIN, MILLER and STEWART, Circuit Judges.


We have duly considered the record, the briefs and oral arguments in this case, which comes before us on petition by the utility taxpayer for a review of the decision of the Tax Court of the United States finding a large deficiency in income taxes for the year 1951, the sole question for determination being whether a rate differential refund of more than a million dollars accrued and was deductible by the petitioner for federal income tax purposes in 1950 or in 1951. The petitioner was on an accrual method of accounting.

It appears from the carefully considered opinion of the tax court that, at the end of the year 1950, the petitioner's liability to make refunds to consumers had been, for all practical purposes, ascertained; and that the electors had approved a 1950 ordinance of the City of Columbus, Ohio, which had been accepted previously by the petitioner. It appears further that the possibility of a disturbance by the Utility Commission of Ohio of the rate agreement between the petitioner and the City of Columbus in the 1950 ordinance, adopted by the city and confirmed by its voters, was too remote to preclude the accrual in 1950 of the resultant refund under the settlement agreement of the parties.

The decision of the tax court accordingly is affirmed upon the basis of the reasoning in that court's opinion.