Court Opinion

ID: 4482423
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:15:28.71487+00
Date Added: 2024-06-11T14:54:01.759721
License: Public Domain

DeeNNEN, /., dissenting: I agree with Judge Dawson’s dissent on the merits of the issue involved. I would like to state an additional reason why I think the action of the maj ority is wrong. The question of whether this Court should follow a reversal by a Court of Appeals was carefully considered in the opinion of this Court in Arthur L. Lawrence, 27 T.C. 713 (1957), revd. 258 F. 2d 562 (C.A. 9, 1958), and cogent reasons were stated why we should not always do so; primarily that being a national court with jurisdiction in tax matters alone, we believed that Congress expected the Tax Court to set precedents for the uniform application of the tax laws, insofar as it would be able to do so. That opinion also suggested the procedure that should be followed after a Court of Appeals had reversed its prior decision on that point. That procedure was stated thusly: Clearly, it [the Tax Court] must thoroughly reconsider the problem in the light of the reasoning of the reversing appellate court and, if convinced thereby, the obvious procedure is to follow the higher court. But if still of the opinion that its original result was right, a court of national jurisdiction to avoid confusion should follow its own honest beliefs until the Supreme Court decides the point. * * * [Fn. omitted.] While the procedure set forth in the Lawrence case was modified in Jack E. Golsen, 54 T.C. 742 (1970), affd. 445 F. 2d 985 (C.A. 10, 1971), certiorari denied 404 U.S. 940 (1971), the basic tenet of the Lawrence rule was not disturbed. In Golsen we stated: it is our best judgment that better judicial administration requires us to follow a Court of Appeals decision which is squarely in point where appeal from our decision lies to that Court of Appeals and to that court alone. [Fns. omitted.] In explaining our reasons for modifying the procedure, we stated: we think that where the Court of Appeals to which appeal lies has already passed upon the issue before us, efficient and harmonious judicial administration calls for us to follow the decision of that court. Moreover, the practice we are adopting does not jeopardize the Federal interest in uniform application of the internal revenue laws which we emphasized in Lawrence. We shall remain able to foster uniformity by giving effect to our views in eases appealable to courts whose views have not yet been expressed, and, even where the relevant Court of Appeals has already made its views known, by explaining why we agree or disagree with the precedent that we feel constrained to follow. [Citation omitted.] Five years ago in John E. Leslie, 50 T.C. 11 (1968), revd. 413 F. 2d 636 (C.A. 2,1969), certiorari denied 396 XJ.S. 1007 (1970),in a court-revierwed opinion with three dissents, this Court, under material facts with which the majority here finds no distinction from the facts in this case, held that an interest deduction is denied under section 265 (2), I.K..C. 1954, only when indebtedness is incurred or continued for the purpose of purchasing or carrying tax-exempt securities, and that the circumstances present established that the indebtedness was not incurred or continued for such purpose, so the deduction was allowed. The Court of Appeals for the Second Circuit, which is not the controlling circuit in this case, while agreeing with the Tax Court that the test under section 265 (2) “is whether or not there is a business ‘purpose’ to purchase or carry obligations the interest on which is exempt, and to incur indebtedness therefor,” concluded that we had misapplied the test and reversed. I can find nothing in the reasoning of the Court of Appeals in Leslie to differentiate it from the reasoning of the dissenters in this Court in the Leslie case. The views of the dissenters were before this Court in the Leslie case and they were given serious consideration but were rejected. Now, in this first case involving the same issue to come before this Court since the Leslie case, the majority opinion accepts the reasoning of the dissenters in Leslie and reverses the position of this Court on the issue. I do not understand how the same reasoning can be anymore convincing to this Court now than it was 5 years ago when we rejected it. The switch in position of this Court after our reversal will, in my opinion, lead Only to confuse taxpayers and the Commissioner of Internal Revenue on what to expect from this Court when the issue comes before us the third time. FoekesteR, Fat, DawsoN, SimpsoN, and FeatheRStoN, //., agree with this dissent.