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Lucas v. North Texas Lumber

United States Supreme Court
281 U.S. 11 (1930)


Facts

On December 27, 1916, North Texas Lumber (NTL) (plaintiff) offered Southern Pine Company a 10-day option to purchase NTL’s assets. On December 30, 1916, Southern Pine notified NTL that it would accept the option, thereby creating an executory contract. On January 5, 1917, NTL delivered the necessary documents and the transaction closed. NTL used accrual-based accounting and thus reported the purchase price on its 2016 federal income tax return. The Internal Revenue Service (IRS) (defendant) determined that the income was taxable for 1917, not 1916. NTL appealed because if the income were taxable for 1916, NTL’s tax burden would have been significantly less. The Board of Tax Appeals affirmed. The court of appeals reversed. The United States Supreme Court granted certiorari.

Rule of Law

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Issue

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Holding and Reasoning (Butler, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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