Court Opinion

ID: 9446211
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:49:12.440729+00
Date Added: 2024-06-11T17:30:34.123604
License: Public Domain

*890On Petition for Rehearing.
Plaintiffs-appellees urge as a basis for rehearing of our reversal of the judgment below in their favor that the recent decision of the Court of Claims in Joseph Horne Co. v. United States, Ct.Cl., 161 F.Supp. 580, is in conflict with our disposition of this case in that it implicitly rejects the prior decision of that court in Kaufmann & Baer Co. v. United States, 137 F.Supp. 725, 133 Ct.Cl. 510, certio-rari denied 352 U.S. 835, 77 S.Ct. 54, 1 L.Ed.2d 54, which we cited as holding that the pre-1948 LIFO regulations were applicable to “retail method” taxpayers. But a careful consideration of the cited case convinces us that this contention is without merit. There is nothing to suggest that the court there thought it was overruling its earlier decision, which is not even cited in either the prevailing or the dissenting opinion. Actually this late case deals with a different statutory provision and a different situation — that of “involuntary liquidation” — than our present issue. Concededly it can be applicable only by a process of reasoning by implication and analogy which we find unpersuasive.
The issue in the Horne case was whether Congress intended, in passing in 1950 as an amendment to I.R.C.1939, § 22(d) (6) (A), 64 Stat. 592, Pub.L. 756, 81st Cong., 2d Sess. (1950), 26 U.S.C.A. § 22(d) (6) (A), to allow taxpayers like Horne the use of the involuntary liquidation provisions therein contained for tax years prior to 1948. Neither the Public Law nor § 22(d) (6) (A) is applicable to the problems raised in this case, which are governed by I.R.C.1939, § 22(d) (2) and (3). The provisions involved in the Horne case were for the benefit of LIFO users; and Horne, unlike Macy, filed a timely election to use LIFO in 1942 and filed its returns for the years in question on that basis. It failed, however, to file the required elections to invoke the involuntary liquidation privileges because the system of indices that it used to convert its inventories to LIFO (store-wide indices) did not disclose the so-called involuntary liquidations. When in 1948 the Commissioner of Internal Revenue published acceptable indices (based on departmental,, rather than storewide, experience) Horne recalculated its prior conversions and discovered involuntary liquidations in certain departments which it then wished to utilize for their tax benefits. It was foreclosed from doing this because of its failure to make timely elections in the past. Congress then passed 64 Stat. 592, and the Court of Claims held that by it Congress intended to provide relief for taxpayers like Horne which did file timely elections to use LIFO, but computed inventories on other than the acceptable departmental bases.
• Macy argues that Horne could not have prevailed in the Court of Claims unless the pre-1948 regulations were inapplicable to “retail method” taxpayers. It seems to be saying that if the regulations applied, Horne had to comply with them by filing inventories using departs mental price indices which would have disclosed involuntary liquidations. Obviously, however, prior to 1948 the Commissioner, in his discretion, had issued no regulations stating acceptable indices. Therefore prior to 1948 Horne could use any method subject to the Commissioner’s approval, and storewide indices were conditionally acceptable. Thus Horne’s proper compliance with applicable regulations did not show involuntary liquidations. So the Court of Claims decided that Congress intended to give relief to taxpayers who otherwise would be harmed by the Commissioner’s failure to publish acceptable indices sooner. Its conclusion is not at all inconsistent with its holding in the Kaufmann & Baer Co. case that the LIFO regulations were applicable (as far as they went) to retail method taxpayers prior to 1948; nor is it inconsistent with our disposition of the present appeal. The other points raised in the petition for rehearing were previously considered and rejected by us.
Petition denied.