Court Opinion

ID: 4499293
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:16:23.477761+00
Date Added: 2024-06-11T14:54:17.346618
License: Public Domain

Smith,
dissenting: I dissent on the last point. The question presented is whether the excess-profits-tax credit provided for by section 29 of the Revenue Act of 1916, added by section 1211 of the Revenue Act of 1917, should he credited against the net income for the entire fiscal.year ending in 1917 or against only the 1917 portion of the net income in determining the amount of the net income subject to the additional 4 per cent income tax imposed by section 4 of the Revenue Act of 1917. As I see it, the 4 per cent tax was never intended to be imposed upon any part of the net income of a corporation received or accrued prior to January 1, 1917; and it was never intended to be imposed upon the 1917 income until after such income had been credited with the excess-profits tax payable upon the same income. Clearly, if this taxpayer had made its returns on a calendar year basis, the entire excess-profits tax payable for 1917 would have been credited against 1917 income and only the remainder would'have been subjected to the 4 per cent tax. Should this taxpayer be prejudiced by reason of the fact that it made its tax returns on a fiscal year basis ? Section 29 of the Revenue Act of 1916, as amended, does not necessarily require the credit of the excess-profits tax against the net income of the entire fiscal year, and such a method of crediting it is not in harmony with the scheme of the statute. Such a construction of the statute was made by this Board in Appeal of F. J. Thompson, Inc., 1 B. T. A. 535, and followed in other decisions. In such decisions the Board violated a cardinal rule of statutory construction, namely, that doubts with respect to the meaning of language used in taxing statutes should be resolved in favor of the taxpayer. United States v. Wigglesworth, 2 Story, 369; Fed. Cas. No. 16,690; Gould v. Gould, 245 U. S. 151.
Furthermore, the identical question involved in this proceeding was before the courts in the case of Semple v. United States, 7 Fed. (2d) 1023; United States v. Semple, (C. C. A.) 10 Fed. (2d) 1023. The Supreme Court denied certiorari in this case on October 11, 1926. It is also to be noted that the Circuit Court of Appeals, Second Circuit, to which an appeal lies in this case, has decided the point in favor of the taxpayer. Bowers v. Carl Schoen Silk Corporation, 16 Fed. (2d) 1014.