1. Under § 23(e) of the Revenue Act of 1932, authorizing in the
computation of income tax deductions for losses sustained during
the taxable year, no deductible loss occurs upon a sale by the
taxpayer to a corporation wholly owned by him. P.
308 U. S.
476.
2. The contention that this conclusion is inconsistent with
prior interpretations of the income tax laws and unfair to the
taxpayer examined and rejected. P.
308 U. S.
478.
3. From the fact that § 24(a)(6) of the Revenue Act of 1934
provides explicitly that losses determined by sales to corporations
controlled by the taxpayer are not deductible, it does not follow
that the law formerly was otherwise. P.
308 U. S.
479.
4. Claims of error prejudicial to the taxpayer, arising out of
the District Court's rulings on evidence in this case,
held without merit. P.
308 U. S.
480.
102 F.2d 456 reversed.
Certiorari,
post, p. 536, to review the reversal, on
cross-appeals, of a judgment in a suit brought by a taxpayer for
refund of a sum paid as income taxes.
MR. JUSTICE REED, delivered the opinion of the Court.
Certiorari was allowed [
Footnote
1] from the judgment of the Circuit Court of Appeals for the
Second Circuit [
Footnote 2] on
account of an asserted conflict between the decision below and
that
Page 308 U. S. 474
of the Circuit Court of Appeals for the Seventh Circuit in
Commissioner v. Griffiths. [
Footnote 3]
The issue considered here is whether a taxpayer, under the
circumstances of this case, is entitled to deduct a loss arising
from the sale of securities to a corporation wholly owned by the
taxpayer. The statute involved is § 23(e) of the Revenue Act of
1932. [
Footnote 4]
The Innisfail Corporation was wholly owned by the taxpayer, Mr.
Smith. It was organized in 1926 under the laws of New Jersey. The
officers and directors of the corporation were subordinates of the
taxpayer. Its transactions were carried on under his direction, and
were restricted largely to operations in buying securities from or
selling them to the taxpayer. While its accounts were kept
completely separate from those of the taxpayer, there is no doubt
that Innisfail was his corporate self. As dealings by a corporation
offered opportunities for income and estate tax savings, Innisfail
was created to gain these advantages for its stockholder. One of
its first acts was to take over an option belonging to the taxpayer
for the acquisition by exchange of a block of Chrysler common
stock. Through mutual transactions in buying and selling
securities, and receiving dividends, the balance of accounts
between Innisfail and the taxpayer resulted, on December 29, 1932,
in an indebtedness from him to Innisfail
Page 308 U. S. 475
of nearly $70,000. On that date, as a partial payment on this
indebtedness, a number of shares of stock were sold to the
corporation by the taxpayer at market. The securities sold had cost
the taxpayer more than the price charged to the corporation, and,
in carrying out the transaction, the taxpayer had in mind the tax
consequences to himself.
In computing his net taxable income for 1932, the taxpayer
deducted as a loss the difference between the cost of these
securities and their sale price to his wholly owned corporation.
The Commissioner of Internal Revenue ruled against the claim,
whereupon respondent paid the tax and brought this suit for refund
in the United States District Court for the Southern District of
New York. The case was tried before a jury, and the verdict was
adverse to the taxpayer's claim that the purported sales of these
securities to Innisfail marked the realization of loss on their
purchase. On appeal, the judgment was reversed and the case
remanded to the District Court for a new trial. It was the opinion
of the Court of Appeals that the facts as detailed above, as a
matter of law, established the transfer of the securities to
Innisfail as an event determining loss.
Under § 23(e), deductions are permitted for losses "sustained
during the taxable year." The loss is sustained when realized by a
completed transaction determining its amount. [
Footnote 5] In this case, the jury was instructed
to find whether these sales by the taxpayer to Innisfail were
actual transfers of property "out of Mr. Smith and into something
that existed separate and apart from him," or whether they were to
be regarded as simply
"a transfer by Mr. Smith's left hand, being his individual hand,
into his right hand, being his corporate hand, so that in truth and
fact there was no transfer at all."
The jury agreed the latter situation existed. There was
sufficient evidence
Page 308 U. S. 476
of the taxpayer's continued domination and control of the
securities, through stock ownership in the Innisfail Corporation,
to support this verdict, even though ownership in the securities
had passed to the corporation in which the taxpayer was the sole
stockholder. Indeed, this domination and control is so obvious in a
wholly owned corporation as to require a peremptory instruction
that no loss in the statutory sense could occur upon a sale by a
taxpayer to such an entity.
It is clear an actual corporation existed. Numerous transactions
were carried on by it over a period of years. It paid taxes, state
and national, franchise and income. But the existence of an actual
corporation is only one incident necessary to complete an actual
sale to it under the revenue act. Title, we shall assume, passed to
Innisfail, but the taxpayer retained the control. Through the
corporate forms, he might manipulate as he chose the exercise of
shareholder's rights in the various corporations, issuers of the
securities, and command the disposition of the securities
themselves. There is not enough of substance in such a sale finally
to determine a loss.
The Government urges that the principle underlying
Gregory
v. Helvering [
Footnote 6]
finds expression in the rule calling for a realistic approach to
tax situations. As so broad and unchallenged a principle furnishes
only a general direction, it is of little value in the solution of
tax problems. If, on the other hand, the
Gregory case is
viewed as a precedent for the disregard of a transfer of assets
without a business purpose, but solely to reduce tax liability, it
gives support to the natural conclusion that transactions which do
not vary control or change the flow of economic benefits are to be
dismissed from consideration. There is no illusion about the
payment of a tax exaction. Each tax, according to a legislative
plan, raises funds to carry
Page 308 U. S. 477
on government. The purpose here is to tax earnings and profits
less expenses and losses. If one or the other factor in any
calculation is unreal, it distorts the liability of the particular
taxpayer to the detriment or advantage of the entire taxpaying
group. [
Footnote 7]
The taxpayer cites
Burnet v. Commonwealth Improvement
Company [
Footnote 8] as a
precedent for treating the taxpayer and his solely owned
corporation as separate entities. In that case, the corporation
sold stock to the sole stockholder, the Estate of P.A.B. Widener.
The transaction showed a book profit, and the corporation sought a
ruling that a sale to its sole stockholder could not result in a
taxable profit. This Court concluded otherwise, and held the
identity of corporation and taxpayer distinct for purposes of
taxation. [
Footnote 9] In the
Commonwealth Improvement Company case, the taxpayer, for
reasons satisfactory to itself, voluntarily had chosen to employ
the corporation in its operations. A taxpayer is free to adopt such
organization for his affairs as he may choose, and, having elected
to do some business as a corporation, he must accept the tax
disadvantages. [
Footnote
10]
On the other hand, the Government may not be required to
acquiesce in the taxpayer's election of that form for doing
business which is most advantageous to him. The Government may look
at actualities, and, upon determination that the form employed for
doing business or carrying out the challenged tax event is unreal
or a sham, may sustain or disregard the effect of the fiction, as
best serves the purposes of the tax statute. To hold otherwise
would permit the schemes of taxpayers to supersede legislation in
the determination of the time and
Page 308 U. S. 478
manner of taxation. It is command of income and its benefits
which marks the real owner of property. [
Footnote 11]
Such a conclusion, urges the respondent, is inconsistent with
the prior interpretations of the income tax laws, and consequently
unfair to him. He points to the decisions of four courts of appeals
which have held losses determined by sales to controlled
corporations allowable, [
Footnote 12] and further calls attention to the fact that
the Board of Tax Appeals has consistently reached the same
conclusion. [
Footnote 13]
But this judicial and administrative construction has no
significance for the respondent. The Bureau of Internal Revenue has
insistently urged since February 18, 1930, the date of the Board of
Tax Appeals' decision in Jones v. Helvering, [
Footnote 14] that a transfer from a taxpayer to
a controlled corporation was ineffective to close a transaction for
the determination of loss. Every case cited by respondent in the
courts of appeals and before the Board of Tax Appeals found the
Government supporting that contention. The Board's ruling in the
Jones case was
Page 308 U. S. 479
standing unreversed at the time of the transaction here
involved, December 29, 1932. It was only after the transactions
here involved, and after the reversal of the Board in the
Jones case on April 23, 1934, or this Court's refusal of
certiorari on October 8, 1934, that the Board of Tax Appeals and
the courts of appeals, over Government protests, ruled in line with
the opinion of the Court of Appeals of the District of Columbia in
the
Jones case. If the Bureau's stand in the
Jones case represented a change in administrative
practice, there can be no doubt that the change operated validly at
least from 1930 on. [
Footnote
15] After the
Jones defeat, the Government sought
relief in Congress, and after the judgment in
Commissioner v.
Griffiths, supra, certiorari here on a conflict in principle
between circuits. Certainly there was no acquiescence by the
Government which would justify the taxpayer in relying upon prior
interpretations of the law. [
Footnote 16]
Respondent makes the further point that the passage of §
24(a)(6) of the Revenue Act of 1934, [
Footnote 17] which explicitly forbids any deduction for
losses determined by sales to corporations controlled by the
taxpayer, is convincing proof that the law was formerly otherwise.
This
Page 308 U. S. 480
does not follow. At most, it is evidence that a later Congress
construed the 1932 Act to recognize separable taxable identities
between the taxpayer and his wholly owned corporation. As the new
provision goes much farther than the former decisions in
disregarding transfers between members of the family, it may well
have been passed to extend, as well as clarify, the existing rule.
The suggestion is not sufficiently persuasive to give vitality to a
futile transfer.
The taxpayer has preserved two objections to the district
judge's rulings on the evidence. He claims that evidence as to
transactions between the taxpayer and the corporation which took
place prior to the sale here involved was remote and highly
prejudicial. We think it apparent that this evidence was entirely
relevant to the present issue; the history of the taxpayer's
relations with the corporation shed considerable light on the
actual effect of the sale in question. The second contention is
that the district judge charged the jury to give less effect to the
book entries of Smith and the corporation than they were entitled
to under the applicable book entry statute. [
Footnote 18] The alleged departure from the
statute has but dubious support in the record, resting on a single
statement of the judge lifted from its context as part of an
extended colloquy with counsel. In the circumstances, there is no
merit in the claim of prejudice to the taxpayer.
The judgment of the Circuit Court of Appeals is reversed, and
that of the District Court affirmed.
Reversed.
[
Footnote 1]
Post, p. 536.
[
Footnote 2]
102 F.2d 456.
[
Footnote 3]
103 F.2d 110,
aff'd sub nom. Griffiths v. Commissioner,
ante, p.
308 U. S. 355.
[
Footnote 4]
47 Stat. 169, 179, 180.
"§ 23. Deductions from gross income."
"In computing net income, there shall be allowed as
deductions:"
"
* * * *"
"(e) Losses by individuals. -- Subject to the limitations
provided in subsection (r) of this section, in the case of an
individual, losses sustained during the taxable year and not
compensated for by insurance or otherwise --"
"(1) if incurred in trade or business; or"
"(2) if incurred in any transaction entered into for profit,
though not connected with the trade or business. . . ."
[
Footnote 5]
Burnett v. Huff, 288 U. S. 156,
288 U. S.
161.
[
Footnote 6]
293 U. S. 293 U.S.
465.
[
Footnote 7]
Cf. Stone v. White, 301 U. S. 532,
301 U. S.
537.
[
Footnote 8]
287 U. S. 287 U.S.
415.
[
Footnote 9]
See also Klein v. Board of Supervisors, 282 U. S.
19;
Dalton v. Bowers, 287 U.
S. 404;
Burnet v. Clark, 287 U.
S. 410.
[
Footnote 10]
Cf. Edwards v. Chile Copper Co., 270 U.
S. 452,
270 U. S. 456.
[
Footnote 11]
Lucas v. Earl, 281 U. S. 111;
Corliss v. Bowers, 281 U. S. 376;
Griffiths v. Commissioner, ante, p.
308 U. S. 355.
[
Footnote 12]
Jones v. Helvering, 63 App.D.C. 204, 71 F.2d 214 (April
23, 1934, reversing 18 B.T.A. 1225, decided February 18, 1930),
cert. denied,
October 8, 1934, 293 U.S. 583;
Commissioner v.
Eldridge, 79 F.2d 629 (November 4, 1935, affirming 30 B.T.A.
1322, decided July 31, 1934);
Commissioner v. McCreery, 83
F.2d 817 (May 13, 1936, affirming B.T.A. memorandum opinion of June
19, 1935);
Foster v. Commissioner, 96 F.2d 130 (April 18,
1938, affirming B.T.A. memorandum opinion of December 23, 1935);
Helvering, Commissioner v. Johnson, 104 F.2d 140 (June 1,
1939, affirming 37 B.T.A. 155, decided January 21, 1938), affirmed
by an equally divided Court,
post, p. 523.
[
Footnote 13]
David Stewart v. Commissioner, 17 B.T.A. 604; Corrado &
Galiardi, Inc. v. Commissioner, 22 B.T.A. 847; Edward Securities
Corp. v. Commissioner, 30 B.T.A. 918; Ralph Hochstetter v.
Commissioner, 34 B.T.A. 791; John Thomas Smith v. Commissioner, 40
B.T.A. 387.
[
Footnote 14]
18 B.T.A. 1225, a rehearing affirmed May 26, 1932,
unpublished.
[
Footnote 15]
Helvering v. Wilshire Oil Co., ante, p.
308 U. S. 90.
[
Footnote 16]
Cf. Sanford's Estate v. Commissioner, ante, p.
308 U. S. 39.
[
Footnote 17]
48 Stat. 680, 691.
"§ 24. Items not Deductible,"
"(a) General Rule. In computing net income no deduction shall in
any case be allowed in respect of --"
"
* * * *"
"(6) Loss from sales or exchanges of property, directly or
indirectly, (A) between members of a family, or (B) except in the
case of distributions in liquidation, between an individual and a
corporation in which such individual owns, directly or indirectly,
more than 50 percentum in value of the outstanding stock. For the
purpose of this paragraph -- (C) an individual shall be considered
as owning the stock owned, directly or indirectly, by his family,
and (D) the family of an individual shall include only his brothers
and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants."
[
Footnote 18]
49 Stat. 1561, 28 U.S.C. § 695.
MR. JUSTICE ROBERTS.
I think the judgment should be affirmed. To reverse it is to
disregard a rule respecting the separate entity of corporations
having basis in logic and practicality and
Page 308 U. S. 481
which has long been observed in the administration of the
revenue acts.
Since the inception of the system of federal income taxation,
capital gains have been taxed and certain capital losses have been
allowed as credits against such gains. In order that this system
might be practical, it has been necessary to select some event as
the criterion of realization of gain or loss. The revenue laws have
selected the time of the closing of a capital transaction as the
occasion for reckoning gain or loss on a capital asset. A typical
method of closure is a sale of the asset.
As the sale is voluntarily made by the taxpayer, his
determination when he shall sell affects his capital gain or loss.
He therefore in a sense, controls the question whether, in a given
taxable year, he must pay tax on a realized gain or may claim
credit for a realized loss. Of course, such a sale must be
bona
fide, and title must pass absolutely. In the present instance,
the sale and transfer were such, and, as the Circuit Court of
Appeals held, there was not a scintilla of evidence to the contrary
for the jury's consideration. A taxpayer who pretends he has made a
sale when in fact he has a secret agreement which leaves him still,
for all practical purposes, the owner of the thing sold is but
committing a fraud upon the revenue.
If the sale is
bona fide, if title in fact passes
irrevocably to another, that other takes as his basis, in reckoning
his gain and loss, the price he paid for the asset, and, upon his
future disposition of it, there will be a new reckoning of gain or
loss with respect to such disposition. Here, if Innisfail either
sold to the respondent or to a third party, it would have to reckon
gain or loss on the sale. If it distributed the asset in
liquidation, the respondent would be subject to a tax liability on
the receipt of his dividend. The sole question, then, is whether,
as matter of law, a
bona fide and absolute sale to a
wholly owned corporation
Page 308 U. S. 482
can constitute a completed transaction, determining a loss.
The problem as to how a sale to a corporation wholly owned or
wholly controlled by an individual taxpayer is to be treated is not
a new one. The existence of such corporations and the dealings
between them and their stockholder or stockholders have long been
understood. Congress was not ignorant of the problem. [
Footnote 2/1] At the outset, Congress might
well have adopted the policy that a sale by the stockholder to the
corporation, or vice versa, should be disregarded, and the
stockholder treated as in effect the owner of the capital asset
until its sale to a stranger. On the other hand, it would be a
practical policy to recognize the separate entity of the
corporation, to treat a transfer at current value for adequate
consideration occurring between it and its sole stockholder as
closing a transaction for the purpose of reckoning either gain or
loss, and then to tax the vendee upon his or its gain or loss upon
a subsequent transfer by comparison of the basis on which the asset
was acquired and the amount realized on final disposition by the
vendee. In fact, the latter course was adopted and was consistently
followed until 1934, when Congress dealt with the subject.
This Court, speaking by Mr. Justice Holmes, said, in
Klein
v. Board of Supervisors, 282 U. S. 19,
282 U. S.
24:
". . . But it leads nowhere to call a corporation a fiction. If
it is a fiction, it is a fiction created by law with intent that it
should be acted on as if true. The corporation is
Page 308 U. S. 483
a person and its ownership is a nonconductor that makes it
impossible to attribute an interest in its property to its
members."
In this view, assets received on the liquidation of a one-man
corporation constitute taxable income to the sole stockholder.
[
Footnote 2/2] Likewise, losses
sustained by a corporation wholly owned by one individual may not
be reported and claimed in the individual tax return of the latter.
[
Footnote 2/3] And the sole
stockholder and his controlled corporation may not tack successive
periods of ownership to make up the two years required for an asset
to become, within the meaning of the statute, a capital asset.
[
Footnote 2/4]
This Court has found that a taxable gain was realized in a case
where a wholly owned corporation sold securities to its sole
stockholder. [
Footnote 2/5] Every
element appearing in that case is paralleled here, as a comparison
of the facts stated in the opinions in the two cases will
demonstrate. This Court said, in the earlier case, referring to the
corporation: "The fact that it had only one stockholder seems of no
legal significance," and held the corporation a separate taxable
entity. It is now said, however, that there is no inequity in not
applying the same rule to losses as to gains because the taxpayer
who exercises the option to conduct a portion of his business
through the instrumentality of a wholly owned corporation does so
in the full knowledge that, if he does, gains shown on sales by him
to the corporation will be taxed, whereas losses on such sales will
not be allowed as deductions. As hereafter will be shown, this is
now true in virtue of the amendment
Page 308 U. S. 484
embodied in the Revenue Act of 1934, but it was not true as the
law stood before the adoption of that amendment.
In 1921, the Treasury was first called upon to deal with a loss
deduction arising out of a sale to a wholly owned corporation. In
that year, it published Law Opinion 1062. [
Footnote 2/6] It was held that, if the sale was
bona
fide and passed title absolutely to the controlled
corporation, even though the sale was made with the intent of
reducing the tax liability of the vendor, it fell within the
provisions of the revenue act concerning the reckoning of gain or
loss upon a closed transaction. So far as I am informed, the
Treasury followed this rule in administering the various revenue
acts for years after it was issued. The first evidence of a change
in its position was the refusal of the Commissioner of Internal
Revenue to recognize losses resulting to taxpayers from a
bona
fide sale of bonds owned by them to a wholly owned corporation
at the current market price. [
Footnote
2/7] The Board of Tax Appeals sustained the Commissioner, but
the Court of Appeals of the District of Columbia reversed the Board
in
Jones v. Helvering, 63 App.D.C. 204, 71 F.2d 214. The
decision was rendered April 23, 1934. The Commissioner sought
certiorari, which was denied October 8, 1934. [
Footnote 2/8] The same result has been reached by
three other Circuit Courts of Appeal. [
Footnote 2/9] The Board of Tax Appeals followed these
decisions. [
Footnote 2/10] In
the
Page 308 U. S. 485
meantime, the Circuit Courts of Appeal had decided numerous
cases which are, in principle, indistinguishable. [
Footnote 2/11] This Court, having denied
certiorari in
Jones v. Helvering, supra, decided
Gregory v. Helvering, 293 U. S. 465, in
the following January. It cited the
Jones case with
approval, 293 U.S. at
293 U. S. 469,
saying:
". . . The legal right of a taxpayer to decrease the amount of
what otherwise would be his taxes, or altogether avoid them, by
means which the law permits, cannot be doubted."
So well settled had the judicial interpretation become that the
Treasury determined to recommend that Congress amend the statute.
[
Footnote 2/12] The result was
the adoption of § 24(a)(6) of the Revenue Act of 1934. [
Footnote 2/13] The Committee reports
disclose that Congress thought it necessary to change the statute
in order to render nondeductible a loss claimed on a sale to a
wholly owned or a controlled corporation. [
Footnote 2/14] Subsequent hearings before the Joint
Commission on Tax Evasion and Avoidance, 1937, p. 207, indicate the
same understanding on the part of the Bureau of Internal Revenue
and of Congress that the rule
Page 308 U. S. 486
of law in effect prior to the adoption of the amendment in 1934
was changed by that legislation. The amendment lists among items
not deductible the following:
"(6) Loss from sales or exchanges of property, directly or
indirectly, (A) between members of a family, or (B) except in the
case of distributions in liquidation, between an individual and a
corporation in which such individual owns, directly or indirectly,
more than 50 percentum in value of the outstanding stock. For the
purpose of this paragraph -- (C) an individual shall be considered
as owning the stock owned, directly or indirectly, by his family,
and (D) the family of an individual shall include only his brothers
and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants."
Plainly, prior to 1934, taxpayers were justified in relying
first, upon the Treasury ruling on the subject and secondly upon
the uniform decisions of the courts in claiming deductions for
losses on sales to controlled corporations. After the passage of
the amendment, they were on notice that this was no longer
permissible.
I turn, then, to the situation here presented. The claims of
this taxpayer, as I have said, had been sustained for prior years
by the Board of Tax Appeals. [
Footnote 2/15] The Congress had enacted that,
subsequent to 1934, the taxpayer could not claim such losses.
Notwithstanding the earlier decisions of the respondent's case and
those of other taxpayers against the Government's present
contention, the Commissioner of Internal Revenue, after the
adoption of the Act of 1934 -- namely on March 11, 1935 -- served a
notice of deficiency upon the respondent respecting losses claimed
in his return for the year 1932 on sales to Innisfail. Thus, the
Treasury repudiated the position it had taken in asking that the
law be amended to cover cases of this kind; reversed its position
in acquiescing in the
Page 308 U. S. 487
adjudication of the respondent's tax liability for earlier years
and sought, now that it had obtained an amendment of the law
operating prospectively, to reach back into sundry unclosed ones --
this one amongst others -- and to attempt to obtain decisions
reversing the settled course of decision. I think this Court should
not lend its aid to the effort.
I am of opinion that, where taxpayers have relied upon a long
unvarying series of decisions construing and applying a statute,
the only appropriate method to change the rights of the taxpayers
is to go to Congress for legislation. In my view, the resort to
Congress, on the one hand, for amendment, and the appeal to the
courts, on the other, for a reversal of construction, which, if
successful, will operate unjustly and retroactively upon those who
have acted in reliance upon oft-reiterated judicial decisions, are
wholly inconsistent.
I am of opinion that the courts should not disappoint the well
founded expectation of citizens that, until Congress speaks to the
contrary, they may, with confidence, rely upon the uniform judicial
interpretation of a statute. The action taken in this case seems to
me to make it impossible for a citizen safely to conduct his
affairs in reliance upon any settled body of court decisions.
MR. JUSTICE McREYNOLDS joins in this opinion.
[
Footnote 2/1]
The Revenue Act of 1932, c. 209, 47 Stat. 169, 196, § 112(b)(5),
provided:
"No gain or loss shall be recognized if property is transferred
to a corporation by one or more persons solely in exchange for
stock or securities in such corporation, and, immediately after the
exchange, such person or persons are in control of the corporation.
. . ."
[
Footnote 2/2]
France Co. v. Commissioner, 88 F.2d 917;
Coxe v.
Handy, 24 F. Supp.
178; Appeal of John K. Greenwood, 1 B.T.A. 291.
[
Footnote 2/3]
Dalton v. Bowers, 287 U. S. 404;
Menihan v. Commissioner, 79 F.2d 304.
[
Footnote 2/4]
Webber v. Knox, 97 F.2d 921.
[
Footnote 2/5]
Burnet v. Commonwealth Improvement Co., 287 U.
S. 415.
[
Footnote 2/6]
4 C.B. 168, cited with approval in G.C.M. 3008 VII-1 C.B.
235.
[
Footnote 2/7]
Jones v. Commissioner, 1930, 18 B.T.A. 1225.
[
Footnote 2/8]
293 U.S. 583.
[
Footnote 2/9]
Commissioner v. Eldridge, 79 F.2d 629;
Commissioner
v. McCreery, 83 F.2d 817;
Helvering v. Johnson, 104
F.2d 140;
Foster v. Commissioner, 96 F.2d 130;
Smith
v. Higgins (the instant case), 102 F.2d 456.
[
Footnote 2/10]
David Stewart v. Comm'r, 17 B.T.A. 604; Corrado & Galiardi,
Inc. v. Comm'r, 22 B.T.A. 847; Ralph Hochstetter v. Comm'r, 34
B.T.A. 791; John Thomas Smith v. Comm'r, 40 B.T.A. 387, involving
prior years of the taxpayer in this case.
[
Footnote 2/11]
Iowa Bridge Co. v. Commissioner, 39 F.2d 777;
Taplin v. Commissioner, 41 F.2d 454;
Commissioner v.
Van Vorst, 59 F.2d 677;
Marston v. Commissioner, 75
F.2d 936;
St. Louis Union Trust Co. v. United States, 82
F.2d 61;
Sawtell v. Commissioner, 82 F.2d 221;
Commissioner v. Edward Securities Co., 83 F.2d 1007,
aff'g 30 B.T.A. 918.
[
Footnote 2/12]
In the Hearings before the Joint Committee on Tax Evasion and
Avoidance, 1937, p. 206, it appears that the Solicitor General
considered the law so well settled that he refused to apply for
certiorari in the
Eldridge case,
supra, 308
U.S. 473fn2/9|>note 9, although the Treasury recommended
such action.
[
Footnote 2/13]
48 Stat. 680, 691.
[
Footnote 2/14]
See the report of the Committee on Ways and Means of
the House of Representatives, H.R. 704, 73d Cong., Second Sess., p.
23; Senate Report 588, 73d Cong., Second Sess., p. 27;
see
also the hearings before the Committee on Ways and Means,
Revenue Revision, 1934, p. 134.
[
Footnote 2/15]
Supra, 308
U.S. 473fn2/10|>note 10.