Court Opinion

ID: 4483250
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:15:59.356541+00
Date Added: 2024-06-11T14:54:03.086747
License: Public Domain

Hall, J. concurring: Courts of Appeals in three circuits have rejected our nonliteral reading of the statutory term "all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights.” Estate of Klein v. Commissioner, 507 F.2d 617 (7th Cir. 1974), cert. denied 421 U.S. 991 (1975), revg. 61 T.C. 332 (1973); Mros v. Commissioner, 493 F.2d 813 (9th Cir. 1974), revg. a Memorandum Opinion of this Court; Fawick v. Commissioner, 436 F.2d 655 (6th Cir. 1971), revg. 52 T.C. 104 (1969). Respondent’s regulations rejecting our position have already been thrice upheld; It is not fair to respondent to continue to force him to litigate this issue. We should now confess error, the more so because none of our opinions on this issue have come to grips with the plain language of the statute. William S. Rouverol, 42 T.C. 186 (1964), simply failed to deal with the fact that the language of section 1235 imposed as a precondition for the statutory safe harbor a more stringent test: "all substantial rights to the patent, or an undivided interest therein which includes a part of all such rights.” Words could not be chosen more precisely to preclude the availability of section 1235 to the transfer of a non-undivided interest in a patent with the retention of substantial rights, but Rouverol did not focus on the statutory language at all. Nor did our cases following it. Vincent B. Rodgers, 51 T.C. 927 (1969); Thomas L. Fawick, 52 T.C. 104 (1969), revd. 436 F.2d 655 (6th Cir. 1971); Estate of George T. Klein, 61 T.C. 332 (1973), revd. 507 F.2d 617 (7th Cir. 1974), cert. denied 421 U.S. 991 (1975). We were in error and having now been so instructed by three Courts of Appeal, we should reverse our position and uphold respondent’s regulations. Nor are respondent’s regulations even particularly harsh. Under them, a patent holder who cannot meet the statutory test may still have recourse to capital gain treatment outside section 1235 if he can meet the holding period required and if he holds the patent as a capital asset. See sec. 1.1235-l(b), Income Tax Regs. But see Myron C. Poole, 46 T.C. 392 (1966). A further reason for disagreement with the majority is its use of Jack E. Golsen, 54 T.C. 742 (1970), affd. on the substantive issue 445 F.2d 985 (10th Cir. 1971), cert. denied 404 U.S. 940 (1971), to avoid stating our views on the issue. In Golsen we said (54 T.C. at 757): Moreover, the practice we are adopting does not jeopardize the Federal interest in uniform application of the internal revenue laws which we emphasized in Lawrence. We shall remain able to foster uniformity by giving effect to our own views in cases appealable to courts whose views have not yet been expressed, and, even where the relevant Court of Appeals has already made its views known, by explaining why we agree or disagree with the precedent that we feel constrained to follow. Golsen did not contemplate that we would abandon our position as a national court for tax matters within our jurisdiction. Our opinions are not written merely to decide the case for the litigants before us, but are for the guidance of the public and respondent (within and without the circuits to which appeal lies). Under our former rule in Arthur L. Lawrence, 27 T.C. 713 (1957), revd. per curiam on the substantive issue 258 F.2d 562 (9th Cir. 1958), we necessarily gave the public the benefit of our views, at the occasional cost of necessitating a superfluous appeal. Golsen was intended, quite properly, to eliminate the superfluous appeal; we shirk our duty if we seize upon it as an occasion also to omit the statement of our views for the guidance of taxpayers in circuits other than that to which appeal lies. Whether the Court reaffirms or recants its prior position, the public should be informed.