[*908] OPINION.

The question here is whether the petitioner is entitled to deduct as a part of the cost of goods sold the amount of $4,137.70 determined by it in December, 1919, to be due its stockholders on wheat purchased from them during the year in accordance with an oral understanding that there would be paid to such stockholders, in addition to the amount paid them at the time of delivery, an amount equal to the difference between such amount plus the cost of reselling the wheat, and the price at which the wheat was resold. The additional price to be paid amounted to 5 cents per bushel and this multiplied by the approximate 80,000 bushels purchased from the stockholders during 1919 amounted to the $4,137.70 here in question. We know of no reason wliy the amount of $4,137.70 should not be treated as a part of the cost of wheat purchased. It was intended by all of the parties that it should be so treated. It has not been the practice of the Commissioner to disallow such items in other cases. See Appeal of Trego County Cooperative Association, 6 B. T. A. 1275. His reason for disallowing the item in the instant case was because it had not, according to his determination,* been declared,[*909] accrued or paid, and was eventually wiped out by operating losses. We have found that the petitioner kept its books upon the accrual basis; that it had .agreed with its stockholders, to pay this additional amount for the wheat purchased from them; that the payment was authorized by the board of directors during 1919; that the petitioner claimed on its income-tax return as a part of the cost of goods sold the amount determined by it in 1919 to be due the stockholders in accordance with the agreement between them; and that the amount so determined was set up on the balance sheet attached to the return as being due its stockholders. We believe that the amount here in question represented an actual liability on the part of the petitioner to its stockholders for wheat- purchased from them during 1919 and should be considered as a part of the cost of goods sold in determining the petitioner’s gross income. It is to our minds immaterial that the liability of $4,137.70 has not, as yet, been paid. There was no evidence that the petitioner never intended to pay it.

Reviewed by the Board.

Judgment will be entered on 15 dags’ notice, under Rule 50.