Document: 381 U.S. 68 85 S.Ct. 1301 14 L.Ed.2d 223 W. Palmer DIXON et al., Petitioners,v.UNIED STATES. No. 486. Argued March 30 and 31, 1965. Decided May 3, Bernard E. Brandes, New York City, for petitioners. Frank I. Goodman, respondent. Mr. Justice BRENNAN delivered the opinion of Court. 1 This case involves issue decided today in United States v. Midland-Ross Corp., 54, 1308. Petitioners are members a partnership which, during tax year 1952, bought 33 short-term noninterest-bearing notes from issuers at discounts between 2 3/8% 3 3/4% face value. The had maturities ranging 190 to 272 days. Their total value was $43,050,000, price $42,222,357. sold 20 before end but after having held them more than six months, realizing gain $494,528. remaining 13 were disposed next year. In its 1952 return reported $494,528 as long-term capital gain, and, although on accrual basis, did not accrue any income account unsold notes. Petitioners' individual returns reflected same treatment their respective distributive shares derived sale Commissioner Internal Revenue determined that realized taxable ordinary income, also portion original discount earned reportable 1952.1 paid resulting deficiencies, this suit refund prevailed District Court Southern York, 224 F.Supp. 358, Appeals Second Circuit, 333 F.2d 1016. We brought here certiorari, 379 943, 437, 542, resolve conflict with supra. affirm. Our holding is entitled gains under 1939 Code requires we affirm result below unless an affirmance precluded by argument made Midland-Ross. petitioners contend purchasing they relied upon Commissioner's published acquiescence Tax Court's decision Caulkins Revenue, T.C. 656, aff'd 144 482, withdrawn until transaction closed,2 which would require treating or exchange asset. Although concede § 7805(b) 1954 has discretion apply withdrawal retroactively, cf. Automobile Club Michigan Commissioner, 353 180, 77 707, 746, he abused his case. Section provides: 4 'Retroactivity Regulations Rulings.—The Secretary (of Treasury) delegate may prescribe extent, if any, ruling regulation, relating internal revenue laws, shall be applied without retroactive effect.'3 5 allowed full amount received taxpayer retirement 'Accumulative Installment Certificate,' debt security lender 10 annual remittances borrower $1,500 each payment $20,000 tenth See supra, U.S., 63, 1313. gave corresponding form discount. basis interpretation 117(f) Act 1938, c. 289, 52 Stat. 447, reenacted Code, provided 'amounts holder bonds, debentures, notes, certificates other evidences indebtedness * interest coupons registered form, considered amounts therefor.' 1955 general matter, exception redemption Accumulative Certificates issued Investors Syndicate purchased period beginning December 25, 1944, date announced 14, 1955, Ruling *.'4 thus covered only securities specific type involved Caulkins, particular issuer there involved. 6 183—184, 709 empowered retroactively correct mistakes law application laws transactions.5 He do so even where have detriment mistake. Manhattan General Equipment Co. 297 129, 56 397, 80 L.Ed. 528. principle no reflection fact Congress, prescribes rulings such force Congress chooses give them, given law. Consequently it appear erroneous decision, ruling, cannot itself bar collecting otherwise lawfully due. 7 But point prefatory statements Bulletins years stating decisions acquiesced 'should officers employees Bureau precedents disposition cases.' See, e.g., 1952—1 Cum.Bull. IV. These merely guidelines personnel, however, hardly help here. title pages taxpayers explicit warning 8 '* information counsel showing trend official Revenue; Treasury Decisions none effect commit Department been formally approved promulgated Treasury.'6 (Emphasis added.) admonition, together language 7805(b)'s predecessor, 3791(b) ample notice immune subsequent correction eliminate mistake 9 Indeed, long question clear 'The power administrative officer board administer federal statute rules regulations make adopt carry into will expressed statute. A regulation does this, operates create rule out harmony statute, mere nullity.' 134,7 400. There could new increasing liability beyond prior superseding corrected defines rights fixes standard measured. constitutes step process. It not, alter operation judicial determination construing applying hand.' Id., 135, 11 reasoning applies greater acquiescences.8 Therefore assuming moment embodied acceptance urge us here, preclude due 12 agree supports finding giving acquiescence. pronouncements according exempt status all automobile clubs similarly situated, following letter favor taxpayer. then view 1945, specifically revoked taxpayer's exemption 1943 years. rejected claim him predecessor. action forecast Counsel Memorandum 1943, back 1943. 185—186, 710—711. two arguments based Michigan. First, change position abuse because, unlike Club, relevant about law, discounted express reliance Caulkins. Second, argue because excepted while effect; said unreasonable arbitrary classification since, assert, significant difference purchased. mentioned certain facts support our conclusion case, follow absence one these another wherein establishes discretion. examined circumstances determine whether 185, 711. present either respects urged prove abuse, reasons stated, justified relying precluding underlying Since warranted, required. 15 Nor merit distinguishing securities, think interpreted proposition treatment.9 That might properly put if, first, squarely element certificate taxed second, should read attributable sales retirements. embodies neither holdings. Therefore, when repudiating earlier prescribed Consequently, accept nonacquiescence constitute complain. 16 As item first: decide apparent opinion. seemed regard 'registered' within meaning 117(f). consideration gain. best highly questionable, therefore, acquiescing conceded extended indebtedness.10 17 second: warranted reading retirement. deals with, rests upon, 117(f), concerned true that, attached, section added 1934, 48 680, 714 715, Fairbanks States, 306 436, 59 607, 83 855; Watson 27 B.T.A. 463. appears erroneously forward distinction favorable 63 66, S.Ct., 1307—1315. Thus did. Indeed since distinguished ground rested consequently inapplicable sale. Paine 23 391, 401, rev'd grounds, 236 398 (C.A.8th Cir.); 65, 1314. 18 Furthermore, assumption contend, burden demonstrating rationally securities. Cf. American State Bank 279 585, 589—590 (C.A.7th Schwartz 40 191, 193. record devoid evidence effort discharge holders themselves. well believed however mistaken tantamount discount, understandable Certificates—the obligations Caulkins—than taxpayers. So thinking, further concluded equitable considerations pointed making Certificates. pass wisdom distinction. suffices say rational must now overturn judgment. 19 Insofar petitioners' policy empowering acts decision,11 appropriately addressed Congress. seen fit allow large measure determining corrections retroactively. abused. Affirmed. correctness income. Again, Midland-Ross, reach intimate accrual-basis required report final obligation. 58, 1308, 1310, note 4. initially notification nonacquiescence. Rev.Rul. 11581, 1, 28. affirmed 11907, 1944 5. reinstatement initial came 1955—1 7, 55—136, 213. 53 467, worded except substituted delegate' Secretary, approval *.' Whether governed provisions governing Code. makes practical identical apart variance above. 1955. However, later limited acquired 1954, 56—299, 1956—1 603, apparently 1232 date. Helvering Reynolds, 313 428, 61 971, 1438; 134—135, 399—400, Compare current Bulletins, wherein, acquiescences, stated: 'Actions acquiescences adverse others conclusions Service Caution exercised extending similar substantially E.g., 1964—1 3. And introduction Rulings expressly warns 'Except indicated, procedures retroactively.' 1. Rev.Proc. 62—28, 1962—2 496, states 504: 'A modified time wise administration taxing statutes. If modified, revocation modification open statutes, exercises discretionary powers limit ruling.' Miller 294 435, 439—440, 55 440, 79 977; Lynch Tilden Produce Co., 265 315, 320—322, 44 488, 1034. stated Rulings. Present practice publish nonacquiescences incorporating rulings. invoke some difference. so, 'equality,' can independent inconsistent, much concern hold matter seeks sustain wrong.' Kaiser, 363 299, 308, 1204, 1210, 1233 (concurring opinion). Schuster 312 311 (C.A.9th Exchange Parts Fort Worth 251, 150 Ct.Cl. 538; City Loan & Savings 177 843, 287 612 (C.A.6th Brecklein Bookwalter, D.C., 231 404; Connecticut Railway Lighting 142 907. obligation treatment; court's primary concern, certificates. Technically, Appeals. still follows noting decisions. Griswold, Summary Problem, 54 Harv.L.Rev. 398, 411—419 (1941).

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