Document: 356 U.S. 30 78 S.Ct. 507 2 L.Ed.2d 562 TANK TRUCK RENTALS, Inc., Petitioner,v.COMMISSIONER OF INTERNAL REVENUE. No. 109. Argued Jan. 29 and 30, 1958. Decided March 17, Mr. Leonard Sarner, Philadelphia, Pa., for petitioner. Solicitor Gen. J. Lee Rankin, Washington, D.C., respondent. Justice CLARK delivered the opinion of Court. 1 In 1951 petitioner Tank Truck Rentals paid several hundred fines imposed on it its drivers violations state maximum weight laws. This case involves deductibility those payments as 'ordinary necessary' business expenses under § 23(a)(1)(A) Internal Revenue Code 1939.1 Prior to 1950 Commissioner had permitted such deductions,2 but a change policy that year3 caused petitioner's expenditures be disallowed. The Tax Court, reasoning allowance deduction would frustrate sharply defined expressed in laws, upheld Commissioner. 26 T.C. 427. Court Appeals affirmed same ground, 242 F.2d 14, we granted certiorari. 1957, 354 920, 77 1378, 1435. our view, deductions properly were Petitioner, Pennsylvania corporation, owns fleet tank trucks which leases, with drivers, motor carriers transportation bulk liquids. lessees operate throughout surrounding States New Jersey, Ohio, Delaware, West Virginia, Maryland, nearly all shipments orginating or terminating Pennsylvania. 1951, tax year question, each these limits vehicles operating highways.4 restricted truckers 45,000 pounds, however, while other through operated allowed weights approximating 60,000 pounds. It is uncontested trucking operations so hindered by this situation neither nor liquid could profitably also observe law. Petitioner's equipment consisted largely 4,500 5,000-gallon tanks, industry rate structure generally was predicated fully loaded use capacity. Yet only one commonly carried liquids weighed little enough truck satisfy statute. Operation partially trucks, not have created safety hazards, been economically impossible any carrier long rest continued capacity loading. And whole partial load basis without driving shippers competing forms transportation. alternative, smaller commercially impracticable, because initial replacement costs even more reduced revenue increased expense, since rates charged based number gallons transported per mile. 3 Confronted dilemma, deliberately overweight hope, at calculated risk, escaping notice local police. conduct constituted willful reciprocity provisions Jersey statute subjected registered restrictions traveling Jersey.5 remainder operated, suffered unintentional violations, temperature changes transit. During total $41,060.84 718 28 innocent violations. Deduction amount return disallowed 4 clear Congress intended income laws 'to earnings profits less losses,' Higgins v. Smith, 1940, 308 473, 477, 60 355, 357, 84 L.Ed. 406, carrying out broad basic taxing 'net, * gross, *.' McDonald Commissioner, 1944, 323 57, 66—67, 65 96, 100, 89 68. Equally well established rule limited are both ordinary necessary taxpayer's business. Deputy du Pont, 488, 497, 363, 416. A finding 'necessity' cannot made, if national policies proscribing particular types conduct, evidenced some governmental declaration thereof. Heininger, 1943, 320 467, 64 249, 253, 88 171; see Lilly 1952, 343 90, 97, 72 501, 96 769. foreshadowed Textile Mills Securities Corp. 1941, 314 326, 62 272, 86 where no congressional intent contrary, validity an regulation reflecting administrative distinction 'between legitimate arising from family contracts law has given sanction.' page 339, 280. Significant reference made Heininger very now before us; stated, 'Where taxpayer violated federal incurred fine penalty he payment.' 253. 5 Here concerned 'evidenced' penal statutes enacted protect their highways damage insure persons using them.6 Petitioner sentenced pay here claimed deductions.7 assessment punitive action mere toll highways: occurred exceptional instance when run detected failure comply obviously balancing cost compliance against chance detection. Such course sanctioned, judicial deference requires, whenever possible, State thwarted policy. We will presume Congress, allowing purposes, encourage enterprise violate declared State. To allow sought increasing odds favor noncompliance. tend destroy effectiveness State's 6 say frustration viewed applied absolute sense. 'It never thought fact expenditure bears remote relation illegal act makes non-deductible.' supra, 474, Although must turn own facts, Jerry Rossman Cir., 175 711, 713, test nondeductibility always severity immediacy resulting deduction. flexibility standard accommodate net income, presumption violation public 7 Certainly most complete direct itself prohibited See Boyle, Flagg & Seaman, 25 43. If act, rather payment present case, attendant upon slightly remote, clearly fall within line disallowance. penalties uniformly held severe fashion reducing 'sting' prescribed legislature.8 8 There merit argument all, merely toll. true provides purchase single-trip permit overweighted trucker; provision forcing removal excess discretion police authorities apparently enforced; devoted road repair municipality township trucker apprehended. Moreover, amended 1955,9 raising restriction making mandatory excess, graduating pounds overweight. These considerations, do fined measure they apprehended 9 Finally, contends least But make between violators, much other. reliance misplaced. Deductions amounts inadvertently collected him OPA overcharges then over Government, Administrator, applying Act, differentiated violators. No differentiation exists here, either application literal language 10 Affirmed. '§ 23. gross income. 'In computing there shall deductions: '(a) Expenses. '(1) Trade expenses. '(A) general. All during taxable trade 53 Stat. 12, amended, 56 819, U.S.C.A. 23(a)(1)(A). (IT:P:2—WTL), CCH Fed.Tax Rep. 6134. 1951—1 Cum.Bull. 15. Del.Laws 1947, c. 86, 2, 21 Del.C. 4503; Flack's Md.Ann.Code 1939 (1947 Cum.Supp.), Art. 66 1/2, 254, 278; N.J.Rev.Stat.1937, 39:3—84, N.J.S.A.; Page's Ohio Gen.Code Ann.1938 (Cum.Pocket Supp.1952), 7248—1; Pennsylvania, Purdon's Pa.Stat.Ann.1953, Tit. 75, 453; W.Va.Code Ann.1949, 1546, 1953 Cum.Supp. 1721 (463) (17C 17—9). N.J.Rev.Stat.1937 (Cum.Supp.1948—1950), 39:3—84.3, N.J.S.A. Because evidence specific legislation, unnecessary decide whether requisite 'governmental declaration' might exist than Act Legislature. Schwartz, Business Expenses Contrary Public Policy, Tax.L.Rev. 241, 248. Unlike States, driver owner trucks. instance, employee, matter course, being bound collective bargaining agreement union representing drivers. See, e.g., United Jaffray, 97 grounds, sub nom. Bertelsen Petersen Engineering Co., 1939, 306 276, 59 541, 83 647; Tunnel R. Co. St. Louis 61 166; Chicago, R.I. P.R. 47 990; Burroughs Building Material 178; Great Northern 40 372; Davenshire, 12 958. Pa.Stat.Ann.1953 (1957 Cum.Ann.Pocket Part), 453.

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