Court Opinion

ID: 9641786
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:40:23.978574+00
Date Added: 2024-06-11T18:10:38.433124
License: Public Domain

HANEY, Circuit Judge,
(concurring and dissenting.)
I concur in the holding that appellee may not invoke an estoppel because appellant has not been shown to have had an intent, or to have made a representation, to mislead any officer of the government.
I am not in accord with the majority’s theory of the case. The Board found that the differential received by petitioner was “not paid to the petitioner as compensation for services rendered”. While ordinarily upon review we may substitute our judgment on that question for that of the Board (Bogardus v. Commissioner, 302 U.S. 34, 39, 58 S.Ct. 61, 82 L.Ed. 32), I think we may not do so here. In making the determination, the controlling factor “is the intention with which payment, however voluntary, has been made”. Bogardus v. Commissioner, supra, 302 U.S. at page 45, 58 S.Ct. at page 61, 82 L.Ed. 32. While such test is stated in the dissenting opinion, I believe the majority agreed on that point. 302 U.S. at page 43, 58 S.Ct. at page 61, 82 L.Ed. 32. I think we should not now attempt to determine that intent, because there was introduced before the Board a number of letters between petitioner and *953the company, and such letters are not contained in the record before us. It is possible that the intent is clearly shown therein. At any rate, I think it to be a dangerous practice to decide cases on only part of the evidence. I think we should order the Board to certify to us the remaining exhibits before decision of the case.1
If we accept the Board’s finding, then the differential was a gift. Bogardus v. Commissioner, supra, 302 U.S. at pages 34, 39, 58 S.Ct. at page 61, 82 L.Ed. 32. Being a gift the basis on sale would “be the same as it would be in the hands of the donor”. Revenue Act of 1928, § 113(a) (2), 26 U.S. C.A. § 113 note. If the stock received by petitioner was treasury stock, then the basis probably would be the cost thereof to the company. Taft v. Bowers, 278 U.S. 470, 49 S.Ct. 199, 73 L.Ed. 460, 64 A.L.R. 362. Compare: Helvering v. Reynolds Co., 306 U.S. 110, 59 S.Ct. 423, 83 L.Ed. 536. If such stock was an original issue, then it is difficult to see any “cost” to the company. Reason indicates that the basis used for computing the gift tax would be the basis. Such basis would be “the fair market value thereof at the date of the gift”. Revenue Act of 1924, § 320, 43 Stat. 314; Regulations 67, Art. 7(3).
On the other hand, if we assume that the differential was compensation for services rendered, then the basis for determining the gain would be “the cost of” the stock. The “cost”, respondent argues, is the amount paid. The word “cost” is defined as follows: “The amount or equivalent paid, or given, or charged, or engaged to be paid or given for anything bought or taken in barter or for services rendered * * * ” Merriam’s Webster’s Diet. (2nd Ed.). Under this definition, the “cost” to petitioner was the amount of cash he paid and the value of the services rendered. Nothing in the act or the regulations promulgated thereunder indicate that the word “cost” was used in a restricted sense. On the contrary, Art. 51 of Regulations 74 shows that a broad, rather than a restricted meaning must be given the word. However, assuming without deciding that such regulation is not applicable here,2 we are required to accord the word its usual significance, as expressed in the dictionary definition. Old Colony Co. v. Comm’r, 301 U.S. 379, 383, 57 S.Ct. 813, 81 L.Ed. 1169. It is difficult to see how a person who rendered services and was paid therefor in stock, could be taxed for the gain arising from subsequent sale, if the limited meaning was held to be the proper one.
The majority distinguish between the “contract” stock and the “expansion” stock, on the theory that the “cost” of the stock was its market value in 1927 when the contract was entered into. I see no basis for such a distinction. The stock was not income to petitioner in 1927 for he did not then receive it, he did not have a fixed and unconditional right to receive it. Spring City Co. v. Commissioner, 292 U.S. 182, 54 S.Ct. 644, 78 L.Ed. 1200. His right was contingent upon earnings, and could be exercised only when he ceased to be store manager, upon his death, or upon termination of the contract by the company.

 The question of intent is usually one of fact. See e. g. Helvering v. Nat. Grocery Co., 304 U.S. 282, 58 S.Ct. 932, 82 L.Ed. 1346; Commissioner v. Cecil B. De Mille Productions, 9 Cir., 90 F.2d 12. In the Bogardus case the disagreement was on the holding that the intent there was “a conclusion of law or at least a determination of a mixed question of law and fact.” In view of the dissenting opinion in the Bogardus ease, the “reconstruction in the membership of the Court” (Associate Justice Frankfurter in Graves v. New York Ex rel. O’Keefe, 306 U.S. 466, 487, 59 S.Ct. 595, 602, 83 L.Ed. 927, 120 A.L.R. 1466); and Helvering v. Nat. Grocery Co., 304 U.S. 282, 58 S.Ct. 932, 82 L.Ed. 1346, it may bo that the rule announced in the Bogardus case, and questioned in the dissenting opinion, will be overruled. I think such possibility does not justify disregard of the Bogardus case until the possibility becomes a fact.

 Larkin v. United States, 8 Cir., 78 F. 2d 951, 954; Commissioner of Internal Revenue v. Farren, 10 Cir., 82 F.2d 141, 143.