Court Opinion

ID: 6889958
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:38:47.522678+00
Date Added: 2024-06-11T16:05:48.801288
License: Public Domain

MAGRUDER, Circuit Judge
(concurring).
I agree that it would be somewhat of a strain on the ordinary meaning of “debts ascertained to be worthless and charged off within the taxable year” to allow this as a bad debt deduction under § 23 (k).
But where, under the law, a refund may be had for the asking, it would seem that the taxpayer has something of value — an “asset” within the dictionary definition. And when this asset vanishes, is irrevocably lost, upon the running of the statutory period for filing a refund claim, why has not the corporation suffered a “loss” within the meaning of § 23(f) ? The very novelty of the argument may make us suspicious of its validity, but it is not easy to formulate the reason for rejecting it. It is not entirely convincing to say that to allow the deduction for a loss in the year in which the statute ran on the original claim for refund would be indirectly to allow in part the outlawed refund claim. The deduction, if allowable, operates only as an offset against income, and if there happened to be no income in the year in which the original refund claim was outlawed, the deduction would afford no tax benefit. This demonstrates, the taxpayer says, that the claim for a loss deduction is not in an accurate sense a claim for refund of any part of the original overpayment.
In this particular case, the original claim for refund, if it had been timely filed, would have been of indisputable validity, founded upon a square decision of the Supreme Court. But the merits of claims for refund are not always so clear, either in fact or in law. Where a refund claim is made within the four-year statutory period, it is the Commissioner’s duty to examine into and rule upon the questions of fact or law presented. However, if the taxpayer’s present contention were accepted, the result would be in fact a doubling of the statutory period within which the Commissioner might have to examine into the questions of fact or law determinative of whether there had been an original overpayment of taxes in 1933. That is, the taxpayer contends that it was entitled to claim a loss or bad debt deduction in its return for 1937, the year in which the original claim for refund was outlawed and lost; that the failure to claim such deduction resulted in an overpayment of about $10,000 in 1937; and that a refund of this latter overpayment may be claimed within a further four-year period, bringing it down to 1941. But this second refund claim would put in issue the question whether there had been an original overpayment in 1933 — involving the very issues of fact or law which had been foreclosed by the running of the statute of limitations on the original refund claim. Indeed, the logic of the taxpayer’s contention would go further: if the taxpayer had let 1941 go by without filing its second refund claim based on its failure to include a loss deduction in its return for 1937, then the taxpayer would have suffered another loss in 1941; and if its failure to claim that loss in its 1941 return should result in an overpayment for that year, the taxpayer would have four more years within which to file a third claim for refund. But such a refund claim, filed in 1945, would carry us back to the issues of fact or law raised by the assertion that there had been an original overpayment in 1933.
*544Such a result would be so clearly in derogation of the policy of the statute of limitations that the novel interpretations of § 23(f) and (k) here advanced ought to be rejected.