Court Opinion

ID: 9461008
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:03:56.059107+00
Date Added: 2024-06-11T17:36:51.255827
License: Public Domain

HUFSTEDLER, Circuit Judge
(specially concurring):
I concur fully in my brother Koelsch’s rationale in disposing of the section 453 issue. I reach his result in deciding the section 1244 issue, but by a different path.
I would not adopt the reasoning of Judge Friendly in Godart v. Commissioner (2d Cir. 1970) 425 F.2d 633 and of the other cases of Judge Friendly’s persuasion- that Judge Koelsch has collected. The requirement that “there must be some substantially contemporary objective evidence that the plan was adopted with § 1244 in view” (425 F.2d at 638), when applied to disqualify a plan that follows all of the objective criteria of section 1244, attributes to *756Congress an unreasonably mystical approach to business financing.1
Rather, I think that the issue is controlled by Warner v. Commissioner (9th Cir. 1968) 401 F.2d 162. Warner struck down an otherwise qualifying plan because the plan did not contain terms explicitly requiring that the stock be sold within the requisite two-year period. Warner could have applied section 1244 and 26 C.F.R. § 1.1244(c)-l(c) less mechanically, but Warner is the law of this circuit, and it disqualifies Rickey’s plan.

. It is also curious that, although § 1244 was intended to encourage investors to commit their funds to small business corporations, Godart requires that the corporation have § 1244 in mind. It is not inconceivable that an investor would buy stock due to the § 1244 incentive even though the corporation in which he was investing did not have the section in mind. ■ Such an investor’s purchase of stock would serve the congressional purpose; the Godart requirement, however, would deny him the section’s benefits.