Court Opinion

ID: 9449580
Source: CourtListenerOpinion
Date Created: 2023-08-04 16:16:11.285309+00
Date Added: 2024-06-11T17:31:53.709297
License: Public Domain

LUMBARD, Chief Judge
(concurring and dissenting).
Although I concur in all that Judge Brown says in Part I of his opinion, I dissent as to Part II. As the taxpayer made his election under § 77 to treat the loans as income at the time of receiving the proceeds of the loans there is no reason why he should not abide the consequences of that decision. If it is proper for Congress to create such a fiction in order to assist the taxpayer there is no reason why the courts should relieve him of the consequences for one year when it appears to him that it would be more advantageous not to treat the loans as income. Here an anticipated rise in the price of wheat made it advantageous to repay the loan on some of the wheat and regain possession of the wheat which was later sold at a profit the next month which fell in a different taxable year. It is just as if a taxpayer sells his property, then buys it back and sells it again. The taxpayer established a new tax basis by repaying the loan and upon the later resale his profit is ascertained by deducting the cost basis from the resale price at the later time. Nor would this procedure be inconsistent with the taxpayer’s operation on a cash basis.
I would affirm the decision of the Tax Court that the taxpayer realized income in 1958 to the full extent of his loan receipts from the Commodity Credit Corporation.