Georgia School-Book Depository v. Commissioner

1 T.C. 463 (1943)

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Nature of the Case

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Facts

Georgia (P) was a broker who got 8% commission on all schoolbooks purchased by the state of Georgia. P performed services for the State such as executing the contracts of the state board of education and taking care of the books in a central depository until final distribution, holding inventory, distribution, and collection of money in payment and holding them in trust until paid over to the publishers. P was also responsible for the return of any unused books and making sure they were in salable condition. P also carried on the same type of business for college books. P did not accrue its commissions on the state books but did so on the college books at the same time its liability for the books to the publishers was accrued. P’s contract with the state said that its fee was due and payable at the time of settlement, which was defined by the contract. The publishers could look to payment from the state, but P could only look to payment from the Free Textbook Fund which was renewed and dependent on an excise on beer. During 1938-39 this fund was insufficient to pay P its fees due. This deficit was not treated as a liability by the state.