Significance
The significance of Warren Jones’ ruling affects taxpayers using the cash method of accounting in regards to determining the amount realized in a deferred payment sale where taxpayers have opted not to use the installment method of accounting.
The U.S. Supreme Court in Burnet v. Logan, 283 U.S. 404 held that taxpayers using the installment method can defer the recognition of gain according to the open transaction doctrine if an obligation’s fair market value cannot be determined.
Can a taxpayer who elects out of the installment method of I.R.C. § 453 still defer the recognition (inclusion in gross income) of gain by using Burnet v. Logan’s open transaction doctrine? Legislative history seems to imply that Congress would say no.
What if a taxpayer elects out of the installment method of accounting despite having the ability to reasonably determine the amount realized from a deferred payment sale? Can the taxpayer defer the recognition of gain in this instance? Presumably not, since “the entire amount realized must be taken into account in the year of sale.” For taxpayers opting to use the cash method of accounting, Warren Jones answers then how amount realized is taken into account. Warren Jones holds that for taxpayers using the cash method accounting then, the entire amount realized “would be the fair market value of the installment obligation.”
Read more about this topic: Warren Jones Co. V. Commissioner Of Internal Revenue
Famous quotes containing the word significance:
“I am not afraid that I shall exaggerate the value and significance of life, but that I shall not be up to the occasion which it is.”
—Henry David Thoreau (1817–1862)
“Politics is not an end, but a means. It is not a product, but a process. It is the art of government. Like other values it has its counterfeits. So much emphasis has been placed upon the false that the significance of the true has been obscured and politics has come to convey the meaning of crafty and cunning selfishness, instead of candid and sincere service.”
—Calvin Coolidge (1872–1933)
“For a parent, it’s hard to recognize the significance of your work when you’re immersed in the mundane details. Few of us, as we run the bath water or spread the peanut butter on the bread, proclaim proudly, “I’m making my contribution to the future of the planet.” But with the exception of global hunger, few jobs in the world of paychecks and promotions compare in significance to the job of parent.”
—Joyce Maynard (20th century)