Court Opinion

ID: 9638407
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:43:15.157706+00
Date Added: 2024-06-11T18:10:06.346209
License: Public Domain

ALLEN, Circuit Judge
(dissenting).
I regret that I cannot agree with the judgment of my brothers. This conclusion reads into the statute a limitation which in my judgment does not exist there, namely, that business expenditures in order to be deductible under the statute must be not only ordinary and necessary but reasonable in amount.
I agree that Congress did not intend automatically to allow as deductions operating expenses paid by the taxpayer in an unlimited amount. But the limitation which Congress imposed to prevent this was that the expenditures be ordinary and necessary. This took care of the situation feared. Cf. Botany Worsted Mills v. United States, 278 U.S. 282, 49 S.Ct. 129, 73 L.Ed. 379. The Supreme Court did not find the expenses there involved to be unreasonable, but “extraordinary, unusual and extravagant” (278 U.S. page 292, 49 S.Ct. page 133), and held that because of this they could not be regarded as ordinary and necessary expenses. This holding does not support the majority conclusion here, for this court, in a judgment which is now the law of the case, has held the expenditures in question to be ordinary and necessary.
Nor does Commissioner of Internal Revenue v. Flowers, 326 U.S. 465, 66 S.Ct. 250, 90 L.Ed. 203, cover the instant controversy. This case involves a construction of the specific provisions of § 23(a) and § 19.23(a)-2 of Treasury Regulations 103, which relate to and define the limitations of travel expenses incurred in the pursuit of business within the meaning of this section. It does not hold that the additional requirements which Congress has specified for the enumerated classes of expenditures such as salaries or compensation for personal services, traveling expenses, and rentals or other payments for the use or possession of property must be fulfilled in order to make deductible types of expenditure, such as those involved herein, allowable under the statute but not included in one of these specific classes.
The judgment of the court in effect grants a rehearing of a case in which final judgment has been rendered and from which no review proceedings were prosecuted.
The order of the Tax Court should be affirmed.