Court Opinion

ID: 4484285
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:16:38.526223+00
Date Added: 2024-06-11T14:53:43.162929
License: Public Domain

Nims, J., dissenting: Whether or not the regulation in question is “interpretive” or “legislative,” it was certainly within the Commissioner’s authority to promulgate and, unless the regulation is unreasonable or plainly inconsistent with section 165(h), it should not be overruled except for weighty reasons. Sec. 7805(a); Bingler v. Johnson, 394 U.S. 741 (1969); Commissioner v. South Texas Lumber Co., 333 U.S. 496 (1948). While this Court has it within its power to hold a regulation invalid, we should be chary of exercising that power in such a way as to unduly interfere with the administrative process. It is one thing to invalidate a regulation which is inconsistent with the statute, but here it seems to me we are essentially questioning the Commissioner’s exercise of judgment on a matter well within his prerogative to determine. Section 1.165-11(e) of the regulations was promulgated in response to an amendment of section 165(h) by section 2(a) of Pub. L. 92-418, effective as to disasters occurring after December 31,1971. Section 165(h), as amended, gives affected taxpayers an election substantially more liberal than that previously provided. And, as indicated in the majority opinion, the regulation provides the aforementioned taxpayers with an extended period within which to make the election. The time prescribed in the regulation was undoubtedly within the Commissioner’s authority to prescribe under section 6071(a), which provides that “When not otherwise provided for * * * the Secretary shall by regulations prescribe the time for filing any return, statement, or other document required by [the Code] or by regulations.” Delegation Order No. 127 (Rev. 1), 1973-2 C.B. 463, which was issued on September 4,1973, and revoked on May 25, 1975 (when its purpose had been served), and by which petitioner attempts to justify his relaxed attitude toward the 90-day revocation deadline, was, in fact, a further liberalization, albeit temporary. The need for the delegation order was obvious: Since amended section 165(h) has been made effective for years beginning after December 31, 1971, and since the present regulation did not become final until March 6, 1973, taxpayers who had made an election regarding January 1, 1972 — March 6, 1973, disaster losses, but without benefit of regulations, justifiably needed, in many cases, additional time within which to reconsider their positions, and Delegation Order 127 made that possible. In no way should such action be read to justify petitioner’s theory that extensions of the period for revocation, even after the election becomes irrevocable under the terms of the regulation, are not inimical to any Government interest. The regulation in its present form puts no particular pressure on the taxpayer to make the election — as the majority observes, he may wait as late as the due date of the disaster-year return to do so, or possibly even later. The majority, however, would permit the taxpayer to immediately make the election, obtain his refund, and then change his mind at his leisure. Such a procedure, if imposed by us upon the Government, can only lead to administrative chaos. For example, it might logically be envisioned that in many cases involving business disaster losses, an election to claim the loss in the preceding year will result in a net operating loss for such year, which, in turn, may result in refunds for yet earlier years. If such refunds are all in due course processed by the Internal Revenue Service, and much later, the taxpayer revokes his election under the majority’s open-ended extension of time, the resulting confusion will be monumental. And it must be remembered that disaster losses by definition involve not one, but hundreds or even thousands of similarly situated taxpayers. Therefore, if the taxpayer is going to revoke his election, the Commissioner is entitled to know about it promptly. The opportunity to obtain quick cash in the wake of a disaster is a humane response to a taxpayer’s plight provided by Congress, but the tollgate through which the taxpayers must pass is that the election must be irrevocable except as modified by the 90-day change-of-mind provision. It is incorrect, therefore, for us to call the 90-day limitation unreasonable. Furthermore, by our striking the 90-day provision, taxpayers generally are left uncertain as to when their election becomes irrevocable. Under the doctrine of election as enunciated in prior decisions of this Court, once there has been a clear exercise of the election, it becomes binding on the taxpayer. Thorrez v. Commissioner, 31 T.C. 655, 668 (1958); Alabama Pipe Co. v. Commissioner, 23 T.C. 95, 98 (1954). This puts the taxpayer in a worse position than before. For the foregoing reasons, I would hold for respondent. Featherston, Dawson, Tannenwald, Simpson, Wilbur, and Parker, JJ., agree with this dissenting opinion.