Case ID: f2d_118/html/0348-01.html
Source: Caselaw Access Project
Author: {"author": "WOODWARD, District Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

FAUROT et al. v. COMMISSIONER OF INTERNAL REVENUE.
    No. 7141.
    Circuit Court of Appeals, Seventh Circuit.
    Jan. 13, 1941.
    Craig R. Johnson, of Chicago, 111., for petitioners.
    Samuel O. Clark, Jr., Asst. Atty. Gen., Sewall Key and S. Dee Hanson, Sp. Assts. to Atty. Gen., and John P. Wenchel and Irving M. Tullar, Bureau of Internal Revenue, both of Washington, D. C., for respondent.
    Before SPARKS and TREANOR, Circuit Judges, and WOODWARD, District Judge.
   WOODWARD, District Judge.

The petitioners, husband and wife, living together, filed a joint return of their income for the calendar year 1935. The wife had sustained losses and the husband had realized gains on the sale of capital assets. The joint return reported a net capital loss, which was the difference between the wife’s losses and the husband’s gains. The Commissioner refused to allow the losses and gains of the petitioners to be thus pooled and computed in the aggregate. The Board of Tax Appeals sustained the Commissioner.

This case is controlled by the opinion of the Supreme Court in the cases of Helvering v. Janney, and Gaines v. Helvering, 311 U.S. 189, 61 S.Ct. 241, 244, 85 L.Ed. -, both cases decided December 9, 1940, and holding that by section 51 (b) of the Revenue Act of 1934, 48 Stat. 697, 26 U.S.C.A. Int.Rev.Acts, page 683, “ * * * Congress intended to provide for a tax on. the aggregate net income and that the losses of one spouse might be deducted from the gains of the other; and that this applied as well to deductions for capital losses as to other deductions.”

Accordingly, the decision of the Board of Tax Appeals is reversed and the case is remanded for further proceedings in conformity with this opinion.