Court Opinion

ID: 9636283
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:22:55.458474+00
Date Added: 2024-06-11T12:09:18.669161
License: Public Domain

SIBLEY, Circuit Judge
(concurring).
With respect to deduction of taxes as an “investment expense,” Revenue Act of 1928, § 203 (a) (5), 26 U.S.C.A. § 203 and note, my views are these: A tax laid directly on an investment which is incurred and paid because of that investment is an investment expense. The taxable gross income of a life insurance company consists (section 202 (a), 26 U.S.C.A. § 202 and note) only of interest, dividends, and rents. The investments concerned, therefore, are loans, stocks, and lands. A general tax on the insurance company or its business would be a business expense perhaps, but not an investment expense. But sums it has to pay because it has specific loans, shares of stock, or pieces of land, are an expense of these investments although a tax. This is recognized in section 203 (a) (6) of the act, 26 U.S.C.A. § 203 and note, which deals with the investment expenses peculiar to land in the language “taxes and other expenses.” Unless taxes be expenses the word “other” is meaningless. Taxes are here specially mentioned as to land in order to contrast them with local benefit assessments and betterments, things peculiar to. landed investments. If, therefore, this company had proven that its loans or stocks had been directly taxed by the State of Texas I should think the taxes would be an expense of these investments to be deducted in order to reach the net interest and dividends which the United States intended to tax.
But this record shows that the capital and surplus of the company was first valued, then estimated reserves and real estate values were deducted under article 4754, Rev.Civ.Stats. of Texas, and the entire remainder taxed. The resulting value on which the tax was laid may have included the value of loans and stocks, but it may have included other things also. The tax paid is too remotely connected with these specific loans and stocks to be said to be an expense due to these investments.