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| Thor Power Tool Company v. Commissioner | ||||
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| Argued November 1, 1978 Decided January 16, 1979 |
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| Holding | ||||
| The Commissioner did not abuse his discretion in determining that the write-down of "excess" inventory failed to reflect petitioner's 1964 income clearly, since the write-down was plainly inconsistent with the governing Regulations. | ||||
| Court membership | ||||
| Chief Justice: Warren E. Burger Associate Justices: William J. Brennan, Jr., Potter Stewart, Byron White, Thurgood Marshall, Harry Blackmun, Lewis F. Powell, Jr., William Rehnquist, John Paul Stevens |
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| Case opinions | ||||
| Majority by: Blackmun Joined by: unanimous court |
Thor Power Tool Company v. Commissioner, 439 U.S. 522 (1979) was a United States Supreme Court ruling which changed the way companies are allowed to depreciate their unsold inventory. Thor’s inventory was overestimated, and was written down to scrap, but it did not immediately scrap the items or sell them at reduced prices. Thor treated the write-down of excess inventory as an adjustment to closing inventory increasing the costs of goods sold and reducing tax due. An unforeseen side effect of this decision was that it became less profitable for publishers to keep slowly but regularly selling books in print (their backlist). Some argue that this has made it harder for midlist authors to make a living because books tend to be remaindered or pulped and go out of print more quickly.
See also
Further reading
- Stadtmauer, G. (1979). "Generally Accepted Accounting Principles as a Reflection of Income: Thor Power Tool Company v. Commissioner of Internal Revenue". Capital University Law Review 9: 775. ISSN 01989693.
External links
- Thor Power Tool Co. v. Commissioner, 439 U.S. 522 (1979) (opinion full text).
- How Thor Power Hammered Publishing by Kevin O'Donnell, Jr.
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