Helvering v. Rankin, 295 U.S. 123 (1935)
U.S. Supreme CourtHelvering v. Rankin, 295 U.S. 123 (1935)
Helvering v. Rankin
Argued March 14, 15, 1935
Decided April 29, 1935
295 U.S. 123
1. For the purpose of ascertaining the taxable gain from a sale of corporate shares made through a broker while he has them in a
marginal account with other lots of the same kind bought at different times and at different prices for the same customer, identification of the lot sold is not dependent on allocation of particular stock certificates, which may be impossible, but is satisfied if the customer, through the broker, designated the shares to be sold as those purchased on a particular date and at a particular price. P. 295 U. S. 128.
2. It is only when such a designation has not been made at the time of sale, or is not shown, that there is room in such cases for applying the "first-in, first-out" regulation of the Treasury (Reg. No. 74, Art. 58), which provides:
"When shares of stock in a corporation are sold from lots purchased at different dates and at different prices, and the identity of the lots cannot be determined, the stock sold shall be charged against the earliest purchases of such stock."
P. 295 U. S. 129.
3. So construed, the regulation affects, at most, the burden of proof, leaving the trader free to establish the identity of the shares by any relevant evidence; it does not create a conclusive presumption arbitrarily depriving him of any of the attributes of ownership, such as the right to decide which shares he will sell. P. 295 U. S. 129.
4. Identification of shares sold with shares purchased, precluding application of the "first-in, first-out " rule, is not made out by proof of a mere intention of the trader not communicated to the broker. P. 295 U. S. 130.
5. The Circuit Court of Appeals is without power, on review of proceedings of the Board of Tax Appeals, to make any findings of fact; the function of the court is to decide whether the correct rule of law was applied to the facts found, and whether there was substantial evidence before the Board to support the findings made. P. 295 U. S. 131.
6. If the Board has failed to make an essential finding and the record on review is insufficient to provide the basis for a final determination, the proper procedure is to remand the case for further proceedings before the Board. And the same procedure is appropriate even when the findings omitted by the Board might be supplied from examination of the record. P. 295 U. S. 131.
7. The Circuit Court of Appeals is not justified in reversing a decision of the Board of Tax Appeals, though it be based on an erroneous rule of law, if the findings of fact, governed by the correct rule of law, are sufficient to sustain the decision and have substantial support in the evidence. P. 295 U. S. 132.
8. Cause remanded to the Circuit Court of Appeals for further consideration on the question whether a finding of the Board of Tax Appeals was without substantial support in the evidence. P. 295 U. S. 133.
73 F.2d 9 reversed.
Certiorari, 294 U.S. 700, to review a judgment reversing a decision of the Board of Tax Appeals, 261 B.T.A. 1204, which upheld a determination of deficiency in income tax.