Court Opinion

ID: 9418934
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:43:29.154077+00
Date Added: 2024-06-11T17:22:13.267059
License: Public Domain

Mr. Justice Stone and Mr. Justice Cardozo
think the judgment should be reversed.
The issue before the Board of Tax Appeals was the existence of a deficiency in respondent’s income tax for a single year, 1931. The deficiency fixed by the commissioner represented her net tax liability for that year and drew in question every item which entered into computation of the tax. Lewis v. Reynolds, 284 U. S. 281, 283. Her appeal to the board drew in question her net tax liability on a reexamination of every item of income in that year which she had challenged in her peti*252tion. The commissioner had treated as taxable income of respondent two items, both received in that year, and assessed a deficiency accordingly. They were a dividend paid to the taxpayer in preferred stock, and cash received by her in that year upon the redemption of preferred stock received as a dividend in an earlier year. The Board of Tax Appeals thought respondent was taxable in 1931 on the first but not on the second item, and reduced the deficiency accordingly. It “Ordered and decided, that there is a deficiency for the year 1931 in the amount of $89,841.75.”
This Court, upon consideration of the facts stipulated by the parties and found by the board, holds that respondent was taxable upon the full amount of the item of cash received but not upon the stock dividend. But, because the commissioner took no appeal from the order of the board, the Court declines to give any effect to its ruling that the cash is taxable income in 1931. If the commissioner had sought only to increase the deficiency found by the board, it may be conceded that the point would be well taken, but such is not his purpose. On the contrary, he accepts the order and relies upon it as establishing a deficiency of which he asks the benefit only so far as it is sustained by the application, to the facts found, of the rule of law announced by this Court.
The circumstance that the board, by the erroneous application of a rule of law to the facts before it arrived at a deficiency which is sustained by a correct application of a different rule, is not ground for setting aside its order. Langnes v. Green, 282 U. S. 531, 538-539; Anderson v. Atherton, post, p. 643; compare Morley Construction Co. v. Maryland Casualty Co., 300 U. S. 185. In denying to the commissioner any benefit of the order because he did not appeal, the opinion of the Court gives no hint of any ground upon which the commissioner should or could have appealed so far as the order fixes a deficiency which the record shows is lawfully due or *253why the respondent is not free to maintain that the board reached the right result even though the reason it gave was wrong.
The cause should be remanded to the Board of Tax Appeals to recompute the deficiency in conformity with the rule of tax liability laid down in the opinion of this Court, but in an amount not exceeding that which the board has found.
General Utilities & Operating Co. v. Helvering, 296 U. S. 200, does not require any different result. There it was held that it was error for the circuit court of appeals, on an appeal by the commissioner, to reverse an order of the board and remand the cause for new findings to support a theory of tax liability which first emerged from the case on appeal. Here there is no new issue to be tried by the board. The only issue is one of law which this Court has resolved and which has been implicit in the case from the beginning.