Court Opinion

ID: 4478928
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:22.219025+00
Date Added: 2024-06-11T15:03:33.448692
License: Public Domain

Opper, J., concurring: The necessity is not apparent to me of deciding more on the second issue than that there can be no deficiency. If petitioners were in receipt of some kind of gross income, possibly comparable to that dealt with in such cases as Charles A. Frueauff, 30 B.T.A. 449 (1934), the corresponding interest deduction would perhaps exactly offset and nullify it. But because that would mean that there is no deficiency, it would not necessarily follow that there was no gross income, as the present opinion, in my view, gratuitously holds. Certainly the statement that “an interest-free loan results in no taxable gain to the borrower” is much too broad a generalization to make here. Suppose, for example, that in such a case as Charles A. Frueauff, supra, the property made available without charge to the shareholder-officer was rented by him to another, instead of being occupied for personal use. Would the fact that he could presumably deduct as a business or nonbusiness expense the hypothetical rental value theoretically paid by him to the corporation, section 212, I.E.C. 1954, and thereby completely offset any gross income, lead us to conclude, as here, contrary to that whole line of cases, that there could be no gross income in the first place ? Or suppose the facts showed that the indebtedness was “incurred * * * to purchase or carry obligations * * * the interest on which is wholly exempt from * * * taxes.” Sec. 265(2), I.E.C. 1954. This being apparently a case of first impression, the present result seems peculiarly unfortunate in deciding a point that need not be passed on. To make matters worse, the burden here is on respondent, since the issue was first raised by his answer;1 and thus in this leading case all factual conclusions and inferences must be favorable to petitioners. Cf., e.g., Spheeris v. Commissioner, 284 F. 2d 928 (C.A. 7, 1960), affirming a Memorandum Opinion of this Court. Disposition of the issue as one of generally applicable law is hence doubly unnecessary. Tietjens, Withey, and Dkennen, JJ., agree with this concurring opinion.   See, e.g., Rainbow Gasoline Corporation, 31 B.T.A. 1050 (1935), decided partly for petitioner and partly for respondent entirely on the question of burden of proof.