City of Los Angeles v. Wilshire Crest Medical Group

Opinion

LAIDIG, J.

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Appellant taxpayer complains of the manner in which the City of Los Angeles seeks to apply its tax on business activities. Such complaint verges on an invitation to an éxcursion in frivolity.

We are importuned to ignore the definition of the term “gross income” contained in the statute establishing the tax in question and to substitute therefor the definition of the term “receipts” contained in a legal dictionary which, in turn, used as its source a Tennessee case construing a statute of that state. We decline, for the reasons hereafter stated, to indulge in such an obliquity.

Appellant is a medical corporation which employed individuals to practice medicine within the City of Los Angeles during 1972, 1973, and 1974. In the court below respondent sought to recover an assess

[889]

ment for unpaid business taxes during the years in question. The evidence was reduced to an agreed statement of facts.

The issue in controversy was the propriety of appellant’s use of the cash method of accounting to report its gross receipts used to measure the business tax for 1972-1974. The court below agreed with respondent’s contention that the accrual method

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of accounting should have been utilized in computing such gross receipts.

Section 21.03 of the Los Angeles Municipal Code imposes a business tax on every person engaged in any of the businesses described in sections 21.50 through 21.198 of the code. The practice of medicine is one of the businesses taxed under section 21.190. The tax is measured by a rate of $5 for each $1,000 of gross receipts or fraction thereof. The term “gross receipts” is defined in section 21.00 of the Los Angeles Municipal Code as follows: “The total amount of the sales price of all sales, the total amount charged or received for the performance of any act, service or employment of whatever nature it may be, whether such service, act or employment is done as part of or in connection with the sale of goods, wares, merchandise or not, for which a charge is made or credit allowed, including all receipts, cash, credits and property of any kind or nature, any amount for which credit is allowed by the seller to the purchaser without any deduction therefrom on account of the cost of the property sold, cost of materials used, labor or service cost, interest paid or payable, losses or any other expense whatsoever.... ”