Court Opinion

ID: 9637013
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:52:51.41847+00
Date Added: 2024-06-11T18:09:52.113263
License: Public Domain

ALLEN, Circuit Judge
(dissenting).
I concur in the view that tho doctrine of res judicata does not apply to an order of the Board of Tax Appeals. I cannot agree., *170however, with the conclusion that the Board in its findings acted arbitrarily and without sufficient evidence, and that its order should be set aside. The Commissioner had disallowed the claimed depreciation of the patents because the evidence submitted to establish their valuation was insufficient. The Board approved the Commissioner’s action for lack of evidence to show error.
The question presented was one of fact, namely, the value of the patents and patent rights when they were acquired by the- petitioner on December 1, 1913. The conclusion of the Board falls within the class mentioned in Rookwood Pottery Co. v. Commissioner, 45 F.(2d) 43, at page 45 (C. C. A. 6). In spite-of its negative form the decision had the character of a finding of fact. It was prima facie correct and should be sustained if supported by evidence. 26 USCA § 1218; Old Colony Trust Co. v. Commissioner, 279 U. S. 716, 49 S. Ct. 499, 73 L. Ed. 918; Phillips v. Commissioner, 283 U. S. 589, 51 S. Ct. 608, 75 L. Ed. 1289; Avery v. Commissioner, 22 F.(2d) 6, 55 A. L. R. 1277 (C. C. A. 5); Henderson Iron Works & Supply Co. v. Blair, Commissioner, 58 App. D. C. 114, 25 F.(2d) 538; Conklin-Zonne-Loomis Co. v. Commissioner, 29 F.(2d) 698 (C. C. A. 8); Northwestern Motor Car Co. v. Commissioner, 45 F.(2d) 357 (C. C. A. 7); Westlake Public Market v. Commissioner, 69 F.(2d) 291 (C. C. A. 9).
Evidence was presented supporting the petitioner’s claim, but if there was substantial evidence to support the conclusion of the Board, it is immaterial so far as this court is concerned whether there is other evidence which, if believed, would support or require a contrary conclusion.
In my opinion there was substantial evidence to support the Board’s conclusion.
Certain expert testimony on behalf of petitioner was given as to the value of these patents upon December 1, 1913. One witness testified that they were worth $170,000. All of the witnesses had or had previously had a close connection with the petitioner. Lack of factual knowledge as to the condition of the business upon December 1, 1913, and of accurate hypothetical assumption of facts led the Board to give little, if any, weight to this opinion testimony. It was not bound to follow it if contrary to the best judgment of the Board. Tracy v. Commissioner, 53 F.(2d) 575 (C. C. A. 6). In view of the record as to the condition of the business prior to December 1, 1913, and for the two years immediately following that date, this opinion evidence was contradicted by the historical facts. The petitioner stated under oath in its capital stock tax return that its stock was sold in 1914 at $2.50 per share.
Moreover, the sworn capital stock returns of the petitioner as to the value of the patents presented substantial evidence supporting the decision of the Board. While the returns set up a substantial book value for the patents, their fair value, as claimed in these sworn returns for the years from 1916 to 1925, with the exception of the year 1918, was not declared. In 1918 the fair value was stated to be “None.”
The decision in Rookwood Pottery Co. v. Commissioner, supra, does not contradict this view. In that ease no tax return of any kind was introduced in evidence, nor was the question of the weight of such sworn statements considered. There is, in my judgment, a material difference between not charging on the books an asset proved to exist, as in the Rookwood Case, and the making of a sworn statement required by law that the fair value of patents as claimed js “None.” The Board did not err in taking these capital stock tax returns into consideration, and its order should be affirmed.