In order to obtain an immediate release of construction holdbacks from the customers of its construction business, the taxpayer deposited securities with them, which were then released after the construction work which it had performed was certified.
Jackett C.J. held that although the holdbacks were in fact received by the taxpayer under this arrangement and therefore included in its income at the time of receipt, it was entitled to a deduction at that time for the value of the securities paid to the customers. This amount would then be included in its income when the securities were released to it.
