Document: 375 U.S. 59 84 S.Ct. 178 11 L.Ed.2d 128 UNITED STATES, Petitioner,v.Aaron ZACKS et al. No. 44. Argued Oct. 21, 1963. Decided Nov. J. Mitchell Reese, Jr., Washington, D.C., for petitioner. Scott P. Crampton, respondents. Mr. Justice HARLAN delivered the opinion of Court. 1 The question in this case is whether § 117(q) Internal Revenue Code 1939, a 1956 amendment to which effected retroactive changes tax treatment transfers patent rights, gives rise claim refund barred by statute limitations generally applicable claims. 2 In 1952, Mrs. Zacks received royalties about $37,000 on patents all substantial rights under she had transferred way an exclusive license manufacturing corporation. accordance with then prevailing rulings Commissioner, were reported as ordinary income 1952 joint federal return filed and her husband 1953. last payment taxes due was made Under governing such taxes, 1956. 322(b)(1), 26 U.S.C. (1952 ed.) 53 Stat. 91.1 By Act June 29, 1956, 70 404, Congress amended provisions 1939 taxability amounts consideration transfer rights. amendment, years beginning after May 31, 1950, provided that circumstances present here should be taxed capital gains rather than income. 3 reliance taxpayers, 23, 1958, pro tanto their taxes. No action having been taken claim, they commenced suit Court Claims. United States asserted defense 7422(a) 1954, 7422(a), 68A 876.2 Claims granted taxpayers' motion strike defense, 150 Ct.Cl. 814, 280 F.2d 829, and, other issues being settled stipulation, entered judgment taxpayers. 4 Because recurring importance problem administration laws conflict between decision below those some Courts Appeals,3 we certiorari. 371 961, 83 543, 9 509. For reasons given hereafter, hold accordingly, reverse below. 5 Section provides pertinent part: 6 '(Q) Transfer Patent Rights.— 7 '(1) General rule.—A (other gift, inheritance, or devise) property consisting patent, undivided interest therein includes part any holder shall considered sale exchange asset held more months, regardless not payments are— 8 '(A) payable periodically over period coterminous transferee's use '(B) contingent productivity, use, disposition transferred. 10 '(4) Applicability—This subsection apply respect amount received, made, pursuant described paragraph (1) taxable year occurred.' Since our sole concern intent adding section Code, it necessary look administrative legislative background enactment. 1946, Commissioner announced his acquiescence Myers, T.C. 258, Tax held, so-called 'amateur' inventor,4 asset, notwithstanding based percentage selling price articles sold paid annually. 1946—1 Cum.Bull. 3. On March 20, reversed position withdrawal stating measured would Mim. 6490, 1950—1 9. new ruling declared 1950. following adhered position, despite its rejection several courts.5 issue future 1954 enactment 1235 1235, 329. only prospectively, contains identical relevant quoted above from 117(q).6 Thus, prior exceptions noted hereafter,7 again law has taxpayers contend suit. 12 1955, issued further declaring he adhere 1950 1954. Rev.Rule 55—58, 1955—1 97. As result, Commissioner's during there gap consistent application administratively judicially established 1946. It evident intended fill when enacted But are able say thereby reopen adjustment claims already limitations. 13 does terms waive finally barred. face, no overrule matter substantive respecting Nor anything history suggests waiver implied. contrary, indications suggest terminate litigation pending. Representative Cooper, Chairman House Ways Means Committee, stated floor House: 14 'The relief (of Code) available applies. result policy Service continue insistence effective date still confronted falling order secure courts, practical unanimity, have entitled. 15 'H.R. 6143 (the original version 117(q)) eliminates necessity making 1950.' 101 Cong.Rec. 12708 (Aug. 1, 1955). 16 There limited intention. abundantly clear aware affects legislation. numerous occasions, included express provision reopening years. We need refer few examples. Technical Amendments 172(f)(3), (4), (g)(3), 72 1606, 1611, rules computing net operating loss deductions starting 1953 extending into short wholly within Subsection (c), added bill Senate, expressly six-month could made. addition explained Senate report follows: 17 'Your committee did amend provision, however, one because now el psed since many transitional concerned closed To prevent denied cases, your amends provide if credit prevented months time operation rule (except closing agreements compromises) credit, nevertheless, allowed bill.' S.Rep. 1983, 85th Cong., 2d Sess. 24. 18 Again, August 9, 69 607, one-year grace filing otherwise 345 1951, 65 452, 517, measure affecting trust accumulated members Armed Services dying active service December 7, 1941, before January 1948. stated: 19 'No 1951 act, cases where refunds credits expiration limitations, court decisions, similar reasons. Your failure oversight, believes equitable extend equivalent compromises).' H.R.Rep. 1438, 84th 1st 1—2.8 20 most striking evidence sort, think but conclusive, found very dispute. That section, retroactively modifying 106 affected taxation taxpayer arising out construction contract Services. (b) deals 21 '(b) ending 1948, 3760 7121 relating agreements, 3761 7122 compromises). Notwithstanding preceding sentence, overpayment resulting limitation overpayment, except expire Act.' 405. 22 went Conference Committee without provision. omparable concerned, 3, also Code. plain, therefore, mind at enacted. offer justification disregarding difference §§ 2, disrespect render carefully drawn latter surplusage. 23 Both Government rely v. Borden Co., 308 188, 198, 60 182, L.Ed. 181, said: 'It cardinal principle repeals implication favored. When two acts upon same subject, give effect both possible.' correctness statement doubted. paucity assistance illustrated fact parties it. place second sentence italics, urge general run 117(q). presses first urges effect, tanto. difficulties these analyses. Obviously, neither them cast conclusion isolated particular case. can doctrine remedial legislation entitled liberal construction, rely, stretched expand reach purpose one. 24 A difficult presented goes beyond created vacillation 1946 treating royalty regard assets, favorable professional well amateur inventors.9 addition, treated longterm requisite period. These subsequent up Insofar Government's renders effect. 25 is, course, duty portions possible. E.g., Menasche, 348 528, 538—539, 75 513, 519—520, 99 615. meant guide courts furthering legislature, overriding rigid adherence require disregard must yield. Two considerations compel here. First, 117(q), discussed above, selection operative leave doubt primarily settle large volume pending ut reaffirmed 1955.10 selected relevance either status inventors held. Second, ready explanation inclusion additional provisions. With irrelevant exceptions, tracks language Pp. 61—62 note 6, supra. natural deal pre-1954 adopting subject. leaves what actually occurred. 1607, 1—2. fair inference obduracy inventors, conceived. nothing indicate reason thoughts make retroactive. controlling weight claimed us, allow tail wag dog. Of amendatory fully Finally, unless deemed waived, premium placed opposition rulings, who contested will refund. view surrounding involved case, emphasized overruling argument less force might another context. event, always attends acceptance lead automatic every Whether done decide. Where decided otherwise, course. 27 Reversed. 28 BLACK agrees affirm judgment. 29 DOUGLAS took 322(b)(1) provides: 'Unless three paid, whichever periods expires later. If taxpayer, therefor taxpayer.' Similar contained 6511(a), (b), 808. proceeding maintained recovery internal revenue alleged erroneously illegally assessed collected, penalty collected authority, sum excessive manner wrongfully until duly Secretary delegate, according regard, regulations delegate pursuance thereof.' Compare Dempster, 265 666 (C.A.6th Cir.), Tobin States, 264 845 (C.A.5th Hollander 248 247 (C.A.2d involving problem. One engaged holding "primarily customers course trade business," 266, distinguished 'professional' inventor so engaged. See Kronner 110 F.Supp. 730, 126 156; Allen Werner, 190 840 Cir.). sustained Second Circuit i Bloch 200 63. Prior position. Celanese Corp., 78 U.S.App.D.C. 292, 140 339; Hopkinson, 406 are: 'A '(2) transferred.' follows 'holding period' inventors. pp. 67 69, infra. examples measures problem, see 92, 93, 100, 1667, 1668, 1673; September 14, 1960, 5, 74 1010, 1013; 1962, 26, 27, 76 960, 1067. February 11, 3; 4; 103, 1675; 30, 1069. Contrary fears seemingly entertained Amici do congressional practice presumption special statute, apply. significance silence judged case-by-case basis, questions statutory construction. Such assets business. 1221, 321. much inventor, reasoning therefrom least clearly right. Cf. Lorenz 296 746, 155 751. finding inventor. Whatever may validity contexts distinction creation clarification existing here, evidenced directly. existence questioned Some pages 35—36 brief.

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