Court Opinion

ID: 9427053
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:19:33.020004+00
Date Added: 2024-06-11T17:23:04.693053
License: Public Domain

Mr. Justice Powell,
dissenting.
The Court’s opinion, with commendable candor, recognizes that logic supports petitioners’ position:
“[We do] not . . . deny the logical force of petitioners’ *540argument that, since the purpose of the personal holding company tax is to force individuals to include personal holding company income in their individual returns, the corporate distributor should get a deduction at the corporate level equal to the income generated by the distribution at the shareholder level as defined by § 301, that is, the fair market value of the appreciated property in this case. See 26 U. S. C. §301 (b)(1)(A).” Ante, at 634-635.
The Court also recognizes the “circularity,” ante, at 534, and the “ambiguity,” ante, at 536, of the relevant provisions of the Internal Revenue Code, as well as the absence of any clarification thereof in the legislative history. The Court simply resolves the statutory jumble in favor of the Treasury Regulation.
It is virtually conceded that this result cannot be squared with the acknowledged purpose of the personal holding company tax. Where statutory ambiguity exists without clarification in the legislative history, a court should read the statute to accord with its manifest purpose. A regulation that defies logic, as well as the statutory purpose, merits little weight.
I find no answer in the Court's opinion to the arguments advanced by Professor Drake. See Drake, Distributions in Kind and Dividends Paid Deduction — Conflict in the Circuits, 1977 B. Y. U. L. Rev. 45. See also H. Wetter Mfg. Co. v. United States, 458 F. 2d 1033 (CA6 1972).*
I respectfully dissent.

I do not view this as a case that, under the Court’s holding today, the Government “wins” and personal holding company taxpayers (other than petitioners) “lose.” It is not at all clear to me that the Court’s resolution of the statutory ambiguity will in the end increase the Government’s *541“take.” The personal holding company device is used by a limited number of sophisticated taxpayers. Under the “adjusted basis” rule upheld by this decision, many of them will be able to schedule the distribution of appreciated and depreciated property in an advantageous manner. Cf. General Securities Co. v. Commissioner, 42 B. T. A. 754 (1940), aff'd, 123 F. 2d 192 (CA10 1941). I simply would have preferred a resolution that advanced the symmetry of the relevant Code provisions, see, e. g., 26 U. S. C. §§ 301, 311, and one compatible with the plain purpose of the personal holding company tax.