Artnell Co. v. Commissioner

400 F.2d 981 (2nd Cir. 1968)

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Nature of the Case

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Facts

The White Sox baseball team sold season tickets and single admissions for later games in advance early in the 1962 baseball season. It also received revenues for broadcasting and televising future games, and it sold season parking books. Its method of accounting was accrual and its taxable year would have normally run to October 31, 1962. Before May 1962, Artnell Company (P) had acquired all the stock in the White Sox, and it was liquidated. P became the owner of all the assets and then continued to operate the team. As of the date of acquisition, the balance sheet showed a deferred income that in part had not yet been allocated to games to be played after May 31. As the games were played, P took into income the amounts of deferred unearned income allocated to each. The income tax return that was filed by Artnell as transferee in May 31, 1962, did not include the deferred unearned income as gross income. The IRS decided that it must be included. The tax court affirmed.