Court Opinion

ID: 4472951
Source: CourtListenerOpinion
Date Created: 2020-01-14 19:35:00.885228+00
Date Added: 2024-06-11T08:49:02.673009
License: Public Domain

Aeundell, J., dissenting: I agree with the majority opinion in its holding that the commissions received for the taxable year 1940 by petitioner in connection with the writing of the five-year performance bonds constituted net abnormal income, and that petitioner is therefore entitled to special relief on its excess profits tax for 1940, under the provisions of section 721 of the Internal Revenue Code. I do not agree, however, that the relief granted is adequate. The majority have attributed one-third of the income to increased demand, improved business, and higher prices; one-third of the income is attributed to the procuring and writing of the bonds; and only one-third of the income is allocated to the succeeding five years which the bonds would run and during which they were to be serviced by petitioner. In my opinion, there is no evidence in the record whatever to support the majority holding that one-third of the income is attributable to “increased demand, improved business, and higher prices.” The evidence makes clear that the large commissions received in 1940 were due to the fact that the bonds were written for a five-year term and not for the usual one-year term. The rate of commission was no greater for the year 1940 than in past years. I agree that a greater sum should be attributable to the first year by reason of the fact that the work incident to the securing and writing of the bonds was performed in that year. But, it seems to me, based on this record, that if one-third of the income is attributed to 1940, this sum is sufficiently liberal to cover the matter of securing the business and writing the bond and also to cover any amount that could be attributed to that* year by reason of improved business. I would, therefore, attribute to the year 1940 not more than one-third of the income and spread the remaining two-thirds, not over the original five-year period of the bond, but over the period that the risk actually extended.