Court Opinion

ID: 6885652
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:27:47.094879+00
Date Added: 2024-06-11T16:05:42.479112
License: Public Domain

HUTCHESON, Circuit Judge
(dissenting).
If I could agree with my brothers that the case before the Board of Tax Appeals (now by statute the Court), was the one that the majority has decided, if in short; the Board had decided that the installment method of reporting once begun may be departed from, I should agree with the majority that the Board had erred. It is quite clear, I think, that no such case was presented to, or adjudicated by the Board, and equally clear, therefore, that no such case is before us for decision. The sole issue presented by the Commissioner to the Board and, as the majority agrees, correctly decided by it, against the Commissioner’s contention, was whether the contract was closed, out and the property repossessed in 1926, and, therefore, the taxpayer received in that year a gain of $40,-000, on the full amount of which she should be taxed. In his deficiency letter, the Commissioner stated;
“It is further held by this office that the above contract was not effectively can-celled in 1927, as claimed but on or before October 19, 1926. *• * * The profit on the repossession of this property has been computed as follows:
Total received in connection
with contract.............. $70,000.00
Reported in 1925 ............. 23,351.12
Profit to be reported in 1926 upon cancellation of the contract ...................... $46,648.88”
In his argument before the Board, the Commissioner made this same and only this same contention. It was in his appeal to this court that the Commissioner first raised the point that he now makes that the amounts received in 1926 should have been reported on the installment basis. I recognize that the salutary rule holding the Commissioner to the position taken before the Board is not absolute but may be departed from where justice requires it (Hormel v. Helvering, 312 U.S. 552, 61 S.Ct. 719, 85 L.Ed. 1037.) It is quite plain, however, that there is no reason here to depart from the rule. The undisputed facts show that, adding to the sums the taxpayer received on account of the contract, the value, $20,000, which the property had when the contract for its sale was cancelled and. it was repossessed by Plaintiff, the total valúe actually received by her was only $1,500 more than her cost. These same undisputed facts show that the taxpayer, under the decision of this court in Saunders v. United States, 5 Cir., 101 F.2d 133, has already paid income tax on a suppositious profit of $23,351.12, and is now being asked under this installment theory to pay taxes on $31,136 more of suppositious but nonexistent profits. In these circumstances, the rule that the Commissioner, after losing his contention before the Board, may not change his foot in this court and the Board *573may not be found in error for not deciding a contention not made before it is a good one. The Board’s decision was right. It ought to be affirmed. I respectfully dissent from its reversal.