OPINION.
Trussell :
Petitioner has alleged that it contracted to purchase cotton from J. H. Cutter & Co.; that it was released from its contract by paying $38,081.88 to J. H. Cutter & Co.; and that it accrued its liability for that amount on its books at the close of the year 1918, but petitioner has limited its proof to the facts that the said liability was accrued on its books in 1918 and paid in February, 1919. Petitioner has failed to adduce evidence as to the nature and terms of the contract, when and under what conditions the contract was canceled, or the time when petitioner's obligation to pay $38,081.88 arose. It is true that petitioner was on the accrual basis of accounting and that it accrued the loss on its books during 1918, but that fact alone does not establish the deductibility of the loss from 1918 gross income, for mere bookkeeping records do not establish the existence of the facts represented by the book entries. Chatham & Phenix National Bank, 1 B. T. A. 460. The record contains insufficient facts to enable the Board to determine that the loss was incurred and properly accrued on petitioner's books during 1918. The respondent's determination with respect to this issue is approved.
Adjustments should be made with respect to'petitioner's tax liability for the years 1918 and 1920, in accordance with the stipulation of the parties hereto.
Order of final determination will he entered pursuant to Rule 50.