Court Opinion

ID: 6860007
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:47:16.996943+00
Date Added: 2024-06-11T08:49:57.834228
License: Public Domain

WILLIAM C. COLEMAN, District Judge
(dissenting).
On the authority of New Colonial Ice Company, Inc., v. Commissioner of Internal Revenue, 54 S. Ct. 788, 78 L. Ed. 1348, decided by the Supreme Court on May 28,1934, I concur fully in the reasoning aud conclusion' of the majority of the court in the present case to the effect that the petitioning taxpayer, a Delaware corporation, should not have deducted from its income for the period from February 21 to December 31,1928, ai net loss incurred by a predecessor New York corporation in the earlier portion of the year. However, I am unable to concur with the majority of the court in their finding that the return filed by the Delaware corporation for the year 1928, which included, but did not segregate, the operations of its predecessor for the first two months of the year, was not a sufficient compliance with the requirements of the Revenue Act of 1928> so as to start the running of the statute of limitations.
In Florsheim Bros. Drygoods Co. v. United States, 280 U. S. 453, page 462, 50 S. Ct. 215, 218, 74 L. Ed. 542, the Supremo Court stated that “The word ‘return’ is not a technical word of art,” and that the filing of a defective or incomplete return may be sufficient to start tho running of the period of limitation, provided such return honestly purports to be a specific statement of tho items of income, deductions, and credits in compliance with the law. These circumstances exist in the present case, with, the additional fact that the Commissioner audiled and accepted the return as being one in compliance with the law, and so notified petitioner. It is true *300that, because of the consolidated nature of the return, it was not possible to determine the separate taxable net income of each of the two corporations. But there was no concealment of the fact that the return involved two corporations. Such appeared upon its face, and thus the Commissioner audited and accepted the return with the knowledge of this fact. It was not until the very recent decision in the New Colonial Ice Company Case, supra, that the requirement for filing separate .returns under such conditions was definitely removed from the field of speculation. Indeed, at the time, there was ample precedent of the Bureau and of the Board of Tax Appeals for making precisely the return that was made. See Ruling, A. R. R. 12, 2 Cumulative Bulletin 612; Grand Rapids National Bank v. Commissioner, 9 B. T. A. 1119.
It is stated in the majority opinion that the return cannot be accepted as a substantial compliance with the law because lacking completely in an essential element, namely, that it did not show, or even purport to show, separately the operations of each corporation. But a return is not a nullity merely because it sets forth more income, more deductions, or more credits than by law it is entitled to. That is actually what occurred in the present case, and, as the petitioner has forcibly asserted, it should make no difference how the improper statement of income, deductions, and credits is brought about in any given return, whether by mistake in addition, subtraction, accounting, facts, understanding of the law and regulations, or the inclusion of items attributable to ¿mother eor'poration but honestly believed by the taxpayer as properly to be taken into account in his or its own return.
Limitations upon the making of assessments have a very definite and important purpose, which is to set a reasonable, time beyond which the threat or imposition of additional taxes against the income of years long past will be completely removed, because unjust to the taxpayer.
I have found no reported ease-which construes the law as strictly as the majority of the court have done, with the possible exception of Lucas v. Colmer-Green Lumber Co. (C. C. A.) 49 F.(2d) 234. If the facts there presented were virtually identical with those now before us, which is not entirely clear from the opinion, I consider the decision too great a refinement of the law.
For these reasons, I feel the decision of • the Board of Tax Appeals should be reversed.