Court Opinion

ID: 9459624
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:26:32.060933+00
Date Added: 2024-06-11T17:36:15.205760
License: Public Domain

WILLIAM J. CAMPBELL, Senior District Judge
(dissenting).
I respectfully dissent. In light of the Tax Court’s ultimate finding that the taxpayer's payment to Zenith was made to preserve his employment and to avoid injury to his business reputation, this seems to me to be a case wherein such expenditures fall squarely within the definition of deductible business expenses under § 162(a) of the Internal Revenue Code of 1954. 26 U.S.C. § 162(a); Lawrence M. Marks, 27 T.C. 464, 467 (1956), (Acq.1966-1 CB-2); Joseph P. Pike, 44 T.C. 787 (1965), (Acq.1968-2 CB-2).
The majority has concluded that the taxpayer’s purpose in making the payments is “irrelevant,” and in reliance upon Arrowsmith and its progeny has reversed the Tax Court. See, Arrow-smith v. Commissioner, 344 U.S. 6, 73 S.Ct. 71, 97 L.Ed. 6 (1952); United States v. Skelly Oil Co., 394 U.S. 678, 89 S.Ct. 1379, 22 L.Ed.2d 642 (1969). My reading of Arrowsmith convinces me that its application is limited to the situation where two separately taxable transactions are really but elements of one continuous or integrated transaction, and the taxpayer’s capacity with respect to those transactions is identical. Here, as the Tax Court specifically found, the sale was made by the taxpayer in his capacity as a shareholder of Zenith, yet his obligation to make the payment in question is attributable to his status as an employee of Zenith. Standing alone, neither the sale, the purchase nor the combination thereof imposed any obligation on him with respect to the payment to Zenith. I would conclude, therefore, that the very limited holding of Arrow-smith is inapposite.
In my view, the real thrust of the majority's opinion is that it would be “anomalous” and somehow inequitable to permit the taxpayer to “profit” by way of a tax advantage from his short-swing dealing in apparent violation of § 16(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78p(b)). In short, the majority would invoke the Internal Revenue Code to enforce the policies of the Securities Exchange Act of 1934. However, general equitable considerations have no place in the administration of tax laws. See Lewyt Corp. v. Commissioner of Internal Revenue, 349 U.S. 237, 240, 75 S.Ct. 736, 99 L.Ed. 1029 (1955). Equally uncontrolling to an interpretation of the Code are this Court’s and the Commissioner’s views of legislative policy and statutory symmetry. United States v. Shirah, 253 F.2d 798, 800 (4th Cir. 1958). It is these considerations that I would find “irrelevant” to our task of interpreting the revenue laws.
In my view the criteria of statutory construction are the words of the statute themselves, when clear and unambiguous. The Tax Court’s ultimate finding that the payments were made by the taxpayer for a business purpose stands unchallenged. That court therefore concluded that they were deductible business expenses under § 162(a) of the Code. I would affirm.