Case Name: William G. and Martha C. MARTIN, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant; Joseph and Evelyn CREEL, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant; Jonnie PARKINSON, Petitioner-Appellee, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant; Max ZAGER and Goldie R. Zager, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant
Court: United States Court of Appeals for the Fifth Circuit
Jurisdiction: United States
Decision Date: 1981-07-06
Citations: 649 F.2d 1133
Docket Number: Nos. 80-1200, 80-3135 and 80-5084
Parties: William G. and Martha C. MARTIN, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant. Joseph and Evelyn CREEL, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant. Jonnie PARKINSON, Petitioner-Appellee, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant. Max ZAGER and Goldie R. Zager, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant.
Judges: Before GOLDBERG, REAVLEY and TATE, Circuit Judges.
Reporter: Federal Reporter 2d Series
Volume: 649
Pages: 1133–1145

Head Matter:
William G. and Martha C. MARTIN, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant. Joseph and Evelyn CREEL, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant. Jonnie PARKINSON, Petitioner-Appellee, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant. Max ZAGER and Goldie R. Zager, Petitioners-Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant.
Nos. 80-1200, 80-3135 and 80-5084.
United States Court of Appeals, Fifth Circuit. Unit A
July 6, 1981.
M. Carr Ferguson, Asst. Atty. Gen., Gilbert E. Andrews, Chief, Appellate Sect., Michael L. Paup, Chief, Appellate Section, Jonathan S. Cohen, James F. Miller, Attys., Tax Div., Dept, of Justice, Washington D.C., for C.I.R.
Cantey, Hanger, Gooch, Munn & Collins, Kirk R. Manning, Fort Worth, Tex., for William G. & Martha C. Martin.
Newton & Shelton, Paul M. Newton, Gulfport, Miss., for Creel & Parkinson.
Tuggle, Duggins, Meschan, Thornton & Elrod, William L. Tankersley, III, Greensboro, N.C., for Max and Goldie R. Zager.
Before GOLDBERG, REAVLEY and TATE, Circuit Judges.

Opinion:
TATE, Circuit Judge:
In Dean v. Commission, 35 T.C. 1083 (1961), the Tax Court held that the use of funds from an interest-free loan to a taxpayer did not constitute a taxable benefit. The Commissioner's present appeals are his latest effort to secure an overruling or modification of the Dean rationale, which the Tax Court followed in the present cases, in its holding that the interest-free loans did not result in taxable income herein. Despite the persuasive reasons offered by the dissenting views, we are unwilling to disturb Dean, at this late date, and we therefore affirm.
The logical anomalies and disparities of the Dean rule, and the extensive commentary critical of it, are well summarized by our dissenting brother in his excellent and perceptive opinion. Nor are we unaware that the solution of the Dean anomaly proposed by the dissenting opinion might indeed furnish a more rational regulation of the tax consequences of interest-free rules than the Dean rule does, albeit the proposed solution substitutes one fiction (i. e., that interest is "paid", which then is "deducted") for the Dean fiction (i. e, that the interest-free loan ipso facto does not produce benefits that under normal tax regulation result in taxable income because the alleged benefit is equalled by a comparable interest "deduction"). The dissent commendably attempts to improve the rough equity of the Dean rule by a more precise attribution of the benefit-deductibility aspects of such a transaction.
On the other hand, the proposed solution implicates complexities in the determination of gross income, and all the attendant computations thereupon based, that might be viewed as derogative of general aims of certainty and ease in the computation of tax consequences of events that have already occurred, as well as in entering into transactions with foreseeable expectation of the tax consequences. (For instance, at what rate, and how, should the "interest" benefit allowed be calculated, for purposes of both gross income and the counter-balancing "deduction"?) Moreover, the Dean rule has been applied by the courts and followed without exception since 1961 in the administration of tax returns, and at least one circuit, for reasons doubtlessly similar to those of the present majority, has recently refused to displace it. Suttle v. Commissioner, 625 F.2d 1127 (4th Cir. 1980). Thus, even if the solution proposed by the dissent is preferable to the Dean rule it is intended to displace, we are not at all certain that its benefits would outweigh the loss of national uniformity in the application of our tax laws.
For these reasons, therefore, we decline to depart from or modify Dean and, accordingly, AFFIRM the judgments of the Tax Court.
AFFIRMED.