Document: 331 U.S. 1 67 S.Ct. 1047 91 L.Ed. 1301 CRANEv.COMMISSIONER OF INTERNAL REVENUE. No. 68. Argued Dec. 11, 1946. Decided April 14, 1947. Mr. Edward S. Bentley of New York City, for petitioner. J. Louis Monarch, Washington, D.C., respondent. Chief Justice VINSON delivered the opinion Court. The question here is how a taxpayer who acquires depreciable property subject to an unassumed mortgage, holds it period, and finally sells still so encumbered, must compute her taxable gain. 2 Petitioner was sole beneficiary executrix will husband, died January 1932. He then owned apartment building lot mortgage,1 which secured principal debt $255,000.00 interest in default $7,042.50. As that date, appraised federal estate tax purposes at value exactly equal total amount this encumbrance. Shortly after husband's death, petitioner entered into agreement with mortgagee whereby she continue operate property—collecting rents, paying necessary repairs, labor, other operating expenses, reserving $200.00 monthly taxes—and remit net rentals mortgagee. This plan followed nearly seven years, during period reported gross as income, claimed allowed deductions taxes expenses paid on property, physical exhaustion building. Meanwhile, arrearage increased $15,857.71. On November 29, 1938, threatening foreclosure, sold third party $3,000.00 cash, $500.00 sale. 3 gain $1,250.00. Her theory 'property' had acquired 1932 1938 only equity, or excess over mortgage. equity zero when it. No depreciation could be taken value.2 Neither nor vendee ever assumed so, realized sale cash received, $2,500.00. sum less basis constituted gain, half assumption entire 'capital asset'.3 4 Commissioner, however, determined $23,767.03. His not claimed, but rather itself, owner's rights possess, use, dispose it, undiminished by original thereof $262,042.50, its Of $55,000.00 allocable land $207,042.50 building.4 During held there allowable $28,045.10 building,5 adjusted time $178,997.40. said include $2,500.00 receipts, also amount6 mortgage sold, both totaling $257,500.00. selling price proportion, $54,471.15 $203,028.85 building.7 Commissioner agreed asset', thought not.8 Thus, he dete mined sustained capital loss $528.85 land, 50% $264.42 account, ordinary $24.031.45 building, indicated. 5 Tax Court asset.' In all respects adopted petitioner's contentions, expunged deficiency.9 did appeal from part ruling adverse her, these questions are no longer issue. Commissioner's appeal, Circuit Appeals reversed, one judge dissenting.10 We granted certiorari because importance raised proper construction provisions Internal Revenue Code.11 6 Act,12 § 111(a), 26 U.S.C.A. Int.Rev.Code, defines 'the disposition property' therefrom provided section 113(b) * *.' It proceeds, 111(b), define any money received plus fair market (other than money) received.' Further, 113(b), 'adjusted determining declared under subsection (a), ((1)(B)) exhaustion, wear tear, obsolescence, amortization extent (but allowable) (a) 'if devise decedent's decedent', 113(a)(5), such acquisition.' 7 Logically, first step scheme determine unadjusted dispute case given term 'property'. If 'property', used provision, means same thing 'equity', would necessarily follow zero, contends. If, contrary, themselves, legal them, $262,042.50. 8 think reasons favoring latter constructions overwhelming weight. place, words statutes—including revenue acts—should interpreted where possible their ordinary, everyday senses.13 relevant definitions found standard dictionaries14 two favored i.e., either ownership, aggregate control thing. 'Equity' synonym, do foregoing suggest correctly used. Indeed, 'equity' defined above liens. *'15 contradistinction hardly more pointed. Strong countervailing considerations required support contention Congress, using word meant we should impute intent convey meaning.16 9 second Commission's position has approval administrative 113(a)(5). With respect valuation section, Reg. 101, Art. 113(a)(5)—1, promulgated Act, date death decedent purpose shall deemed value. *' involved were 1932, value—$262,042.50—was estate. accordance law17 regulations,18 always liens, returned, mortgages separately deducted computing estate.19 quoted provision Regulations been effect since 1918,20 statutory repeatedly reenacted substantially form,21 former may itself now considered have force law.22 10 Moreover, many instances parts Act Congress expressed idea find misuse confusion ideas.23 some sections, unmistakably sense.24 hand Treasury intended meaning 'equity,' use appropriate language.25 11 A further reason why 113(a) construed mean bearing allowance collateral adjustments basis. 12 Section 23(l) permits deduction income 'a reasonable tear Sections 23(n) 114(a), §§ 23(n), declare 'basis upon depletion allowed' 'provided sale' 13 Under provisions, if mortgagor's basis, allowances deducted. is, annual computed value, seem required,26 they represent fraction cost corresponding recoupment mortgagor remainder can effected reduction his year sale.27 accept minus deny altogether.28 argues taking require changed each payment mortgage,29 attendant problem recomputing tremendous accounting burden taxpayer. acquire timing allowances. 14 Thus appears applicable expressly preclude contrary certain implicit principles depreciation, entails very great difficulties.30 added never furnished guide through maze problems arise connection depreciating but, consistently permitted full subtracted Surely, Congress' long-continued acceptance situation gives legislative endorsement.31 15 conclude 113(a)(5) thereon, correct next ascertain what 113(b). rate stipulated, point whether warranted making whatsoever. 16 113(b)(1)(B) provides 'proper adjustment cases made adequate evidence house kind taxpayer's trade business, consequently entitled 23(l), except that, Court, just decided avoid difficulty, determined. 17 urges deductions, whatever law allows them actually bears loss,32 hers mortgagee's. see, established factual premise. There finding effect, lien. Nor record, indication produce evidence, so. facts lien six one-half years condition deteriorated increased, entirely inconclusive, particularly light buyer's willingness take pay substantial boot. Whatever rule allowing possession clearly worth lien, faced see decid now. 18 At last come 'amount realized' recalled, received,' 111(a) Quite obviously, reference sale, sense acquisition 113, stated heretofore discussing functional relation sections requires does other. valued free priced subsequent thing.33 19 Starting point, absurdity quarter-of-a-million dollar roughly per cent took 99 loss. Actually, urge this. She argues, conversely, only, forced 113. adhere, already avoided our conclusion properly included 20 concedes personally liable purchaser within 111(b).34 deciding repudiated notion actual receipt seller himself 'money' 'other property', narrowest senses. decisive defeat intention another frustrate whole,35 'beneficiary' 'as real (a sense) creditors.'36 21 Both points apply case. mentioned already. second, mortgagor, debt, additional consideration, realizes benefit well boot.37 pays boot, immaterial receive discharge prior merel transfer mortgage—it make difference mortgagee, mortgagor. Or put way, concerned strictly speaking, debtor him property. reality owner mortgaged figure sell, treat conditions personal obligations.38 transfers discharged, another. 22 Therefore right $257,500.00 23 Court's determinations, related measure realized, announced rules general applicability clear-cut law.39 therefore jurisdiction review them.40 24 contends result reached Sixteenth Amendment. direct constitutional sense, wholly without merit.41 transaction 'by dictates common-sense ruinous disaster', termed brief, disagree almost amount. crux case, really, exclude consideration gain.42 showed does, enjoy double deduction, assets. Amendment itself. 25 Affirmed. JACKSON, dissenting. 27 concluded nothing. default, forfeited terminable immediately perhaps receiver pendente lite. Arguments advanced whole thereupon came owe debt. Likewise argued transferred release But arguments conclusive province Dobson v. 320 489, 64 239, 88 248; Scottish American Investment Co., Ltd., 323 119, 65 169, 89 became hence released simply subtraction receive, sold. left nothing small margin equivalent redemption bought Laws. decide taken, issue about here. 28 reverse sustain decision 29 FRANKFURTER DOUGLAS join opinion. record show course, inconsistent practice claiming held. $25,500.00. See 117(a)(b), c. 289, 52 Stat. 447, 117. asset' need years. parties stipulated relative sales 2% annum. explains amount, present attributable due, deductible item. supra, note 4. 117(a)(1), supra. T.C. 585. 117(a) account 117(b), character business. accepted inconsistently claimed. For reasons, expunge deficiency entirety. Cir., 153 F.2d 504. 328 826, 66 980. All references act unless otherwise Code identical. Old Colony R. Co. 284 552, 560, 211, 213, 76 484. Webster's International Dictionary, Unabridged, 2d Ed.; Funk & Wagnalls' Standard Dictionary; Oxford English Dictionary. Crooks Harrelson, 282 55, 59, 51 49, 50, 75 156. 202 203(a)(1), 1916; 402 403(a)(1), Acts 1918 1921; 302, 303(a)(1), 1924 1926; 805, 811, 812. 37, Arts, 13, 47; 63, Arts. 12, 41; 68, 38; 70, Arts 80, 38. City Bank Farmers' Trust Bowers, 68 909, denied, 292 644, 54 778, 78 1495; Rodiek Helvering, 87 328; Adriance Higgins, 113 1013. 45, 1562; 62, 1563; 65, 1594; 69, 74, 596; 77, 86, 113(a)(5)—1(c); 94, 103, 19.113(a)(5)—1(c); 111, 29.113(a)(5)—1(c). 202(a)(3), 204(a)(5), 1924; 1928; 1932; 1934; 1936; 1938; Code, Helvering Reynolds 306 110, 114, 59 423, 425, 83 536. Cf. Stockholmes Enskilda Bank, 293 84, 87, 55 51, 79 211. Sec. 23(a)(1), 'rentals continued (the taxpayer) equity.' business 1926, 27, 44 9; 209, 47 280. 24; 3482, I.R.C., 3482; 105, 81.38. Regulations, appearing 1937, T.D. 4729, 1937—1 Cum.Bull. 284, estates return 'only (or indebtedness). Secs. defining which' 'to allowed', distinguish between minuend deducted, dividend computed. indicate purposes. 23(1)—4, 5. practice, 23(1)—5, part: 'The recovered charged off useful life installments recognized apportionment units production.' Detroit Edison ommissioner, 319 98, 63 902, 903, 1286. So long remains possession, even sustains loss, 'used business.' 113(b)(1)(A) 'for expenditures chargeable 30 Obviously considering redeem possession. situation, undoubtedly constitute 113(a). arise. 28. 31 22. 32 F. Lazarus 308 252, 60 84 226; Duffy Central 268 64, 45 429, 431, 69 846. 33 Maguire 313 1, 8, 61 789, 794, 85 1149. troubled argument contract conveyance only. conveyed title buyer until 34 United States Hendler, 303 564, 58 655, 82 1018; Brons Hotels, Inc., B.T.A. 376; Walter Haass, 37 948. Douglas Willcutts, 296 56 80 3, 101 A.L.R. 391. 35 page 381. 36 566, 656, 1018. Obviously, cannot realize Consequently, different might encountered abandoned receiving That 38 instance, returned own out deductions. 141; 23(b)—1; 23(b)—1. 39 Wilcox, 327 404, 410, 546, 550; Bingham's 325 365, 369—372, 1232, 1234—1236, 1670. John Kelley 326 521, 527, 698, 299, 302; 248. 40 Ibid; 1141(a) (c), 1141(a, c). 41 9, 391; Burnet Wells, 289 670, 677, 53 761, 763, 77 1439. 42 course made, analogy, greater later person, Whether qu stion before us, presently answer.

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