Court Opinion

ID: 4480059
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:01.420803+00
Date Added: 2024-06-11T14:52:59.014866
License: Public Domain

Ratjm:, J., dissenting: I think that a fair reading of United States v. Gilmore, 372 U.S. 39, and United States v. Patrick, 372 U.S. 53, calls for a result contrary to that reached in the prevailing opinion, and that the distinction between sections 212 (1) and (2) relied upon by the majority is spurious. Sections 212 (1) and (2) of the 1954 Code, here involved, are merely fragmented parts of what was formerly section 23(a) (2) of the 1939 Code, the history of which was outlined in Gilmore. At one time section 23 (a) provided merely for the deduction of expenses in carrying on a trade or business. It was then amended so as to add deductions for like expenses not connected with trade or business. The old trade or business deductions were continued in section 23(a) (1), and the new deductions were contained in section 23(a) (2). These new deductions were spelled out in section 23(a) (2) as follows: (2) Non-trade or Non-business Expenses. — In the case of an individual, all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income, or for the management, conservation, or. maintenance of property held for the production of income. The Supreme Court in Gilmore held that section 24(a) (1), which specifically denied any deduction for “personal” or “family” expenses, was a Imitation upon section 23(a)(2), and that, accordingly, expenses incurred by a husband in a divorce action to protect his income-producing property were not deductible even though the situation were otherwise literally covered by section 23(a) (2). The theory of the decision in that case and in Patrick was that the claims in respect of which the expenses were incurred arose from the taxpayer’s “marital relationship * * * and were thus the product of [his] * * * personal or family life * * 372 U.S. at 56. That theory was plainly applicable to all parts of section 23 (a) (2), which had the identical legislative history, and I can conceive of no justification for reaching a different result in respect of that portion of section 23(a)(2) that became section 212(1) of the 1954 Code from that portion which became section 212(2). Section 24(a) (1) is just as much a limitation upon that part of section 23(a) (2) which deals with deduction of expenses incurred “for the management, conservation, or maintenance of property held for the production of income” as it is upon that part which involves expenses “for the production or collection of income.” If the fact that the claim grew out of the marital relationship required classification of the expenses as “personal” or “family” under section 24(a) (1) in the one situation, the same must obtain in the other. And there is no suggestion whatever that a contrary result must be reached merely because section 23(a) (2) was itself divided into two parts as section 212 (1) and (2) of the 1954 Code, obviously for the purpose of drafting convenience only. Section 24(a) (1) of the 1939 Code became section 262 of the 1954 Code, and the limitations in respect of deductions for “personal” and “family” deductions in section 262 are just as much a gloss on section 212 as the corresponding provisions of section 24(a) (1) were a restriction on section 23 (a) (2). Gilmore and Patrióle make it clear that such limitations are operative when the claim arises out of the marital relationship in a divorce proceeding, and I think it quixotic to reach a different result here. The mere fact that the Treasury has not withdrawn the regulation upon which the majority rely is of no controlling significance. The Gilmore and Patríele cases were decided only last year, and it is notorious that the wheels of administration often turn slowly. TietjeNS and Pierce, agree with this dissent.