Court Opinion

ID: 4478818
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:18.850969+00
Date Added: 2024-06-11T15:03:31.428716
License: Public Domain

MuRdock and Raum, JJ., dissenting: The only question here is whether the petitioner qualifies for relief under section 722(c)(1). The statute provides that the tax computed without the benefit of section 722 shall be considered to be excessive and discriminatory in the case of a taxpayer like this one if the excess profits credit based on invested capital is an inadequate standard for determining excess profits because the business of the taxpayer is of a class in which intangible assets not includible in invested capital under section 718 make important contributions to income. The parties have stipulated that if the petitioner is qualified it shall be entitled to a constructive average base period net income of $50,000. The only question in view of the stipulation would seem to be whether the contract of August 1,1941, was an intangible asset which made important contributions to income, Ro argument is made that it was includible in invested capital under section 718. The Bulletin and other administrative rulings and regulations are only binding to the extent that they are a reasonable and proper interpretation of the law, but even therein it is recognized that a “contract” can be regarded as an intangible asset. The evidence shows that this contract made important contributions to income of the petitioner. Rot only did it reduce costs and expenses, thereby contributing substantially to net income, but the evidence indicates that it made some important contributions to gross income through the handling of' classified advertisements. We think the petitioner has qualified under section 722(c) (1) and is entitled to the stipulated amount of relief.