Court Opinion

ID: 9447978
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:19:08.257161+00
Date Added: 2024-06-11T17:31:14.968007
License: Public Domain

HAMLIN, Circuit Judge
(dissenting).
I respectfully dissent. While my brothers agree that the result to the taxpayer is “an example of inequities” in income tax laws, they do not feel able to reverse the case. The statute and the regulations all use the word “made” as the critical word. In the context in which this word is used, it is ambiguous.
In this case the taxpayer had, within the time permitted by the statute, executed a contract to erect a new residence according to plans and specifications at a price of cost plus ten percent. She had incurred an obligation to pay this sum and was legally liable therefor. She had done all that she could to make a completed transaction. The contract provided that the construction be completed wit.hin the allowable statutory period. She had moved into the new residence within the allowable statutory period. However, through no fault of hers and solely because the contractor and subcontractor could not obtain and install the required interior woodwork on time, the job was not finished until after the 18 months period.
To reach their conclusion my brothers add words to the statute by construing the ambiguous word “made” to mean “had constructed and used.”
In another place in the opinion it is stated that “one logical interpretation of the statute is to read the phrase following the word ‘made’ — namely: ‘which are properly chargeable to capital account,’ as modifying only the word ‘improvements,’ and not modifying ‘acquisition, construction, [and] reconstruction.’ ” Such an interpretation would result in a reversal, but it is rejected in the opinion of the court because it “was not the interpretation placed on the statute by the government in its Regulations * *
Nor do I think the legislative history as cited in the opinion is persuasive of the majority position. It is merely a restatement in different words of the proposed statute and to me is just as consistent with a reversal in this case as with an affirmance.
This was a statute designed to help the taxpayer by postponing taxes upon the sale of residences. It was passed because it is universally known that by reason of inflation the cost and selling price of all residences have increased substantially. I would construe the statute to provide the relief intended in cases such as this one where the taxpayer had incurred definite and final liabilities by a binding legal contract which by its terms is to be performed within the 18 months period and where by no fault of the taxpayer the construction is not completed within that time.
I do not believe that such a construction of the statute would be “judicial legislation” but that it would be such a construction of the statute as Congress intended.
I would reverse the decision of the district court.