Court Opinion

ID: 6880896
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:15:37.285047+00
Date Added: 2024-06-11T16:05:35.210487
License: Public Domain

BIGGS, Circuit Judge
(dissenting).
I must dissent respectfully from the opinion expressed by the majority of the court for the following reasons.
Section 42 of the Revenue Act of 1934 is clear and explicit. It provides, among other things, that upon the death of a taxpayer there shall be included in computing net income for the taxable period in which falls his death, “amounts accrued up to the date of his death if not otherwise properly includible in respect of such period or a prior period.” The purpose of Congress in enacting the Statute also is plain.1 It was to tax income accrued prior to the death of a decedent who was on a cash basis, such income frequently having been held by the courts to be received by the estate as capital.
The majority seems to me to interpose 'an entirely fictitious barrier to the operation of Section 42. They say that because En-right, alive, could not have received his proportionate part of the partnership income until distribution of it was made in accordance with the partnership agreement, the income here sought to be taxed cannot be treated as accrued up to the date of his death, relying upon Section 182 of the Revenue Act. Enright is dead, however, and the question for our determination is whether the income here taxed “accrued up to the date of his death”. An examination of the partnership agreements, particularly paragraph 5 of the supplemental contract entered into by the partners upon January 2, 1934, as well as the eighth item of En-right’s will, the partnership agreement entered following Enright’s death, and Revised Statutes of New Jersey 42:2-24, N.J. S.A. 42:2-24, makes it clear that the sums taxed by the decision of the Board were intended by the interested parties to be treated as accrued up to the date of Enright’s death. Assuming that Section 182 of the Revenue Act is entitled to the interpretation given to it in the majority opinion, none the less I cannot conclude that such an interpretation is pertinent to the issue at bar in the light of the agreements and course of conduct between Enright and his partners.
I conclude that the case at bar is governed by the decisions of the Supreme Court in Bull v. United States, 295 U.S. 247, 254, 55 S.Ct. 695, 79 L.Ed. 1421, and in Guaranty Trust Company v. Commissioner, 303 U.S. 493, 58 S.Ct. 673, 82 L.Ed. 975. The decision of the Board of Tax Appeals should be affirmed.

 See H. Rep. No. 704, 73d Cong. 2d Sess. p. 24 and S. Rep. No. 558, 73d Cong. 2d Sess. p. 28.