Source: https://supreme.justia.com/cases/federal/us/316/164/
Timestamp: 2019-04-19 00:40:35+00:00

Document:
1. A finding of the Board of Tax Appeals that certain sale of stock by the taxpayer in this case were ordinary sale, and not "short" sales, was supported by substantial evidence, and was therefore conclusive. P. 316 U. S. 167.
2. The criteria which the Board employed in determining whether the sales of stock in this case were "short" sales complied with the legal principles announced in Provost v. United States, 269 U. S. 443. P. 316 U. S. 168.
3. The Circuit Court of Appeals is authorized by statute to modify or reverse a decision of the Board of Tax Appeals only if it is "not in accordance with law." P. 316 U. S. 168.
Certiorari, 315 U.S. 789, to review the reversal of a decision of the Board of Tax Appeals, 42 B.T.A. 173, redetermining a deficiency in income tax.
The sole question presented by this case is whether certain sales of shares of stock made by the taxpayer, petitioner's decedent, were "short" sales or sales of "long" stock. If they were not "short" sales, then the taxpayer was justified in deducting from dividends credited to the "long" shares the amount of dividends charged to the shares sold.
42 B.T.A. 173. The Circuit Court of Appeals reversed. 124 F.2d 156. We granted the petition for certiorari, 315 U.S. 789, limited to the question whether the sales in the "short" account were in fact "short" sales, because the action of the Circuit Court of Appeals in setting aside the findings of the Board on that issue was seemingly erroneous under the rule of such cases as Helvering v. Lazarus & Co., 308 U. S. 252.
stock. On the basis of such facts, the Board found that "the sales in question were intended to be and were actually executed as ordinary sales, or sales of shares held" in the taxpayer's "long accounts."
In overturning that finding of fact, the Circuit Court of Appeals laid great emphasis on the manner in which the transactions were entered on the taxpayer's books. It also noted that gains or losses were not reported at the moment of the sales, but only when the covering transaction was completed, and that the certificates used in completing the sales were in no way designated as belonging to the taxpayer. And it also stated that it could not be said that the broker did not use borrowed stock to make deliveries on the "short" sales. On that aspect of the case, respondent lays primary emphasis. The contention is that the taxpayer's "long" stock was not "delivered" in consummation of the sales in the "short" account, since the broker merely made delivery out of certificates in street names held by it or for its account, instead of borrowing from other brokers, and since none of those street certificates was in any way designated as the taxpayer's. It is urged that, the facts being undisputed, the question of whether stock was borrowed to complete the sales was a question of law as respects which the Board did not have the final say.
made and which we have enumerated. Those findings are supported by substantial evidence, and are abundant justification for the Board's ultimate finding that the sales made through the "short" account were ordinary sales. It is the function of the Board, not the Circuit Court of Appeals, to weigh the evidence, to draw inferences from the facts, and to choose between conflicting inferences. The court may not substitute its view of the facts for that of the Board. Where the findings of the Board are supported by substantial evidence, they are conclusive. Helvering v. Lazarus & Co., supra; Helvering v. Kehoe, 309 U. S. 277, and cases cited. Under the statute, the court may modify or reverse the decision of the Board only if it is "not in accordance with law." 44 Stat. 110, § 1003(b), 26 U.S.C. Int.Rev.Code, § 1141(c)(1). In this case, the criteria which the board employed in determining whether the sales were "short" sales complied with the legal principles announced in Provost v. United States, 269 U. S. 443.

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