Legal Document

366 U.S. 380 81 Supreme Court Reporter 1326 6 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 356 UNITED STATES, Petitioner,v.CONSOLIDATED EDISON COMPANY OF NEW YORK, INC. Number 357. Argued April 24, 1961. Decided May 22, Mr. John baron Jones, Jr., Washington, D.C., for petitioner. James K. Polk, New York City, respondent. Justice WHITTAKER delivered the opinion of Court. 1 Respondent brought this action in District Southern to recover a claimed overpayment federal income taxes year 1951. It keeps its books and files returns on calendar-year accrual basis. The case turns correct determination proper deduction certain contested real estate taxes. Specifically, question is whether part tax accrued (1) it was assessed and, purpose—and as only mode recognized by local law—of avoiding seizure sale property while contest pending, 'paid' taxpayer, or (2) finally determined. 2 Court, following holding Claims Consolidated Edison company versus States, 135 F.Supp. 881, 133 Ct.Cl. 376, that such 'payment' ' accrues item even though payment made under protest litigation started within taxable obtain repayment,' id., at page 885, pages 383 384, held, without opinion, 'payment.' On appeal, Appeals, divided court, held determined, reversed judgment. 279 Federal Reporter, 2nd 152. reasoned inasmuch respondent 'keeping basis,' 'only when all events (had) occurred which determine(d) fact amount liability.' Id., 155. To resolve conflict between decision below supra, we granted certiorari. 364 890, 220, 5 186. 3 During years involved—1946 through 1950—respondent owned numerous tracts City were subject annual Under law, Council annually fixes rate, Tax Commission valuations. Thus each tract determined multiplying valuation rate. rate not contestable, but timely application (commonly called 'protest') may be an erroneous valuation. Among other things, must state taxpayer 'consider(s) full value January 25 (of current) year' thus establish contested. Upon exhaustion administrative procedure, review Commission's had judicial proceeding, commonly certiorari State taxpayer's o le exclusive remedy. But institution suit does stay suspend maturity bill, 7% interest it, nor satisfy lien. Thus, review, either 'pay' suffer penalty run risk property.1 4 Though five hundreds are involved aggregate very substantial, parties commendably stipulated facts sufficiently reflected, purposes suit, simplified example: In 1946 1950, notified tentative which, established would produce $100. then filed bona fide (in respect many, nearly all, tracts) stating $85, asking balance proposed stricken excessive. After hearing, rejected protest, assessment $100 made. Thereupon respondent, honestly stated purpose contesting proceedings remitted city cash equal $100, immediately thereafter commenced proceeding again admitted liability denied any excess amount. December 1951, upon consent action, entered order (each of) fixing respondent's $95, thereupon forthwith returned $5 Although engaged with Commissioner over identical question, namely, treatment accorded $15 1938, 1939 1941—which issue decided 1955 favor Government, supra—respondent, terms illustrative example, deducted returns, $100; return 1951—in $95—respondent failed deduct $10 from, included in, gross year.2 Believing 1951 resulted paying lesser more than should have paid,3 February claim refund so much from failure year, valid, inclusion year. rejection claim, claimed, obtained result already stated. 7 settled 'taxable treated separate unit, items reflected their posture close Burnet Sanford & Brooks Co., 282 359, 51 150, 75 L.Ed. 383; Heiner Mellon, 304 271, 58 926, 82 1337; Guaranty Trust Commissioner, 303 493, 673, 975; Security Flour Mills 321 281, 64 596, 88 725. And agree that, applicable statutes,4 neither Government accrual-basis cause one accrued. Anderson, 269 422, 46 131, 70 347; supra; Olympic Radio Television, 349 232, 733, 99 1024. They also 'touchstone' determining 'all events' test supra,5 since reaffirmed occasions, now fundamental principle accounting. See, e.g., Lucas American Code 280 445, 50 202, 74 538; Brown Helvering, 291 193, 54 356, 78 725; Dixie Pine Products 320 516, 364, 270; supra.6 recognize amplified, says 'added refinement to,' holding, could not, 'contesting courts,' 'the tax, theory state's exaction constituted fixed liability,' 'must, circumstances, await event court might adjudicated.' 519, 365. That specifically supra.7 8 $85 owing intended paid satisfied remittance, dispute. Respondent's good faith, assessment, dispute, expressly 'disavow(s) suggestion * claims against bad calculatingly inflated those claims, prosecute them diligence.' Nor questioned accords 'good accounting' principles. 9 concordance views ends point. contends remittance city, whole for, did constitute 'satisfaction' of, both disputed undisputed parts assessment; pays thereby discharges liability, expense has been incurred there no longer contingency prevent accrual.' Respondent, hand, insists admit was, effect, mere deposit, nature bond, required practical sense, law available validity being diligently way allowed laws State. 10 narrow here rendered accruable remittance. Like think right contention, $5, judgment liable, 11 attempts distinguish Pn e cases ground cases, primarily relies decisions Chestnut Securities 62 574, 104 489 376. 12 turned judicially (for 1936—1938) they 1940, final upholding 1942, contended Government. Squarely contrary contention here, relying 'since (taxpayer's) accounts kept basis, take until adversely it.' (62 576, 489.) case, (was) wrong' contention. Although, consonance said '(o)ne entitled accrue debt asserted him he disputes litigates, concluded,' went say '(b)ut if promptly begins get money back, status discharged payment. hardly conceivable him, payment, yet 'accrued' meaning terminology Accrual, debtor's standpoint, precedes survive 494 495. after pointing Court's use phrase 'and pay' 'Since (the taxpayer) pay, during 1935, position accounting treat Government's concluded: 'In instant paid. We interest, requisite debtor, actual occurred.' 13 same parties, questions present earlier years. recognizing opinions 'settled' 'that denying refusing payment,' rejected, 'not necessarily true,' argument therefore admission absence denial before effect repayment' (135 884, 382); purporting follow, seemingly departing concluded otherwise repayment.' 383—384. (Emphasis added.) conclusion 14 Just what mean italicized explained, evident 'otherwise year,' payment—whether character deposit enable certainly render nonaccruable; if, immaterial, least unnecessary, accruability. appears rule although regarded admittedly year.' 15 Disagreeing Appeals concluded, correctly, accruability tax—apart respecting 'satisfaction'—was governed supra (see note 5), amplified affirmed supra. See notes 7. 16 As circumstances refer sought taxpayers, thought, agree, references sake complete accuracy important but, far concerned, collateral matter, determinative considerations it. 17 'Payment' talismanic word. many meanings depending sense context used. correctly observed 'A capital expenditure, exchange assets, prepaid expense, current expense,' '(w)hen exact ascertainable because depends some future event, outcome litigation, event.' 156. 18 Of course, unconditional apparent matured is, more, plain persuasive evidence, (have) occur(red) fix determine pay it,' 441, 134, 19 where, admit, denied, satisfy, 'in bond (so much, any, contested) (as might) (be) found due' (Rosenman 323 658, 662, 65 536, 538, 89 535, see Lewyt Corporation Cir., 215 518, 523), sole staying—there stay—an possible State, will do lib ility, accruable. 20 conclude liability; liable 21 Affirmed. procedures fully set forth 882, 378. asserts compulsion G.C.M. 25298, issued directly 1947 (1947—2 Cum.Bull. 39), saying, 'a later time notwithstanding continuation contest. basis relates deductibility unpaid items,' insisted treatment, despite his modification thereof Mim. 6444 (1949—2 11), saying pertinent part, 'payment (a) prerequisite appeal deductible 25298.' economic consequences arise corporate rates (normal plus surtax) increased 38% 3/4% particular instance, revenue produced taking 1946—1950 recognizes sustained, entry herein reaudit assess deficiencies based years, accordance provisions §§ 1311—1315 Internal Revenue 1954, 26 Annotated KF65 U5 1311—1315. statutes 23(c), 41, 42, 43 48 (26 KF62 (1952 ed.), 43, 48, 48). These counterparts prior Acts 1954. Inasmuch really serve useful abstract here. Anderson declared so-called follows: technical legal argued becomes due; true advance occur respect, ascertaining fr given period, munitions stand different footing expenses appearing appellee's books. bookkeeping statute Treasury accrued.' 134. 'It long truly reflect indebtedness paid; cannot where contingent taxpayer.' unsettled contingent, denies, whereof contesting.' 284, 5979 contingent,' '(s)ince (tax) 597.

Classification Label: 11