Lucas v. North Texas Lumber

281 U.S. 11 (1930)

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Nature of the Case

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Facts

On, December 27, 1916, P gave to the Southern Pine Company a ten-day option to purchase its timberlands for a specified price. Southern arranged for the money needed and December 30, 1916, notified P that it would exercise the option. P ceased operations and withdrew all employees from the land. On January 5, 1917, the papers which were required to effect the transfer were delivered, the purchase price was paid, and the transaction was finally closed. P kept its accounts on the accrual basis and treated the profits derived from the sale as income in 1916. D determined that the gain had been realized in, and was taxable for 1917. The Board of Tax Appeals sustained his finding. The Circuit Court of Appeals reversed the Board. The Supreme court granted certiorari.