Court Opinion

ID: 4493251
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:03:51.207194+00
Date Added: 2024-06-11T15:03:59.843218
License: Public Domain

Black,
dissenting: It is my view that the exempt status provided as to certain income described in section 116 (a) of the Revenue Act of 1928 was intended to apply to the period of employment and to the time of employment, not to the period of actual receipt of the income.
It is my view that the exempt status was to attach at the time the income was earned, assuming that the condition of bona fide non-residence is established, and, once attached, the income remains exempt. As I view it the effect of the majority opinion is to hold that, under such circumstances as we have in the instant case, if a taxpayer keeps his books and makes his income tax returns on an accrual basis, he would get the benefits of section 116 (a), but if he keeps his books and makes his returns on the cash receipts and disbursement basis, he loses it.
Section 42 of the Revenue Act of 1928 reads: “ The amount of all items of gross income shall be included in the gross income for the taxable year in which received by the taxpayer, unless, under methods of accounting permitted under section 41, any such amounts are to be properly accounted for as of a different period.”
In compliance with this provision of the law petitioner returned for taxation in 1928, $7,990 69 of the $20,832.86 due him for 1927 commissions but actually received in 1928, and the balance, $12,842.17, attributable to the 225 days in 1927 during which he was a bona fide nonresident of the United States, he excluded from his gross income because it was exempt. In doing this, I think he complied with the law and I dissent from the majority opinion, which holds otherwise.