Court Opinion

ID: 9460007
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:37:29.55036+00
Date Added: 2024-06-11T17:36:25.519063
License: Public Domain

SWYGERT, Chief Judge
(dissenting in part).
If we are to adhere to- 26 U.S.C. § 6501 and the cases which have interpreted its predecessors, taxpayer must be held free from an assessment of tax for the fiscal years 1954 through 1958. The statute of limitations has run against the Commissioner. Accepting, arguendo, the opposite conclusion, I am at a loss to understand why it is that taxpayer — being newly apprised of an assessment of tax by the Commissioner — was not, like any other taxpayer filing a return for the first time, allowed to exercise the option of filing a joint return with his wife, rather than being taxed at an individual rate.
*49I
The argument of the Commissioner on the question of the statute of limitations is essentially this:
[U]se of partnership returns in conjunction with individual returns may help the Commissioner to ascertain a taxpayer’s total groSs income and, in that respect, may lessen the need for a period of limitations longer than three years in which to audit a taxpayer’s return and compute his taxes. This fits into a larger rationale behind the period of limitations provisions, i. e., that the Commissioner should not be limited to a three-year period unless he is furnished with all of the data necessary to compute a taxpayer’s income. Such needed data, in the case of a partner, include not only his distributive share of partnership gross income, but income from other sources, exemptions, deductions, and credits. App.Br. at 18, 19.
The majority reach their decision on exactly this basis, noting, too, that 26 U.S. C. § 6501(e) — which deals with substantial omissions from gross income reported on a return — is inapplicable by reason of a proviso appended thereto which makes an exception for cases where there has been a “failure to file a return.” The majority add their estimation that the failure of Durovic to file Forms 1040 for the years in question contributed impermissibly to the Commissioner’s task of auditing, and observe that a holding for Durovic on the authority of Germantown Trust Co. v. Commissioner of Internal Revenue, 309 U.S. 304, 60 S.Ct. 566, 84 L.Ed. 770 (1940), would foster situations in which the applicability of the limitations statute would depend on some undefined “happenstance.” I submit that these various rationales do not stand penetrating analysis.
The overall statutory scheme of 26 U.S.C. § 6501 is more complex than a first reading suggests. Subsection 6501 (a) sets down the general rule of limitation on assessment and collection:
Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any time after such tax became due and before the expiration of 3 years after the date on which any part of such tax was paid, and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.
Six years, however, is allowed the Commissioner for an assessment when a taxpayer has made a “substantial omission of items” within the meaning of subsection 6501(e)(1)(A):
If the taxpayer omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return was filed. For purposes of this subpara-graph—
(i) In the case of a trade or business, the term “gross income” means the total of the amounts received or accrued from the sale of goods or services (if such amounts are required to be shown on the return) prior to diminution by the cost of such sales or services; and
(ii) In determining the amount omitted from gross income, there shall not be taken into account any amount which is omitted from gross income stated in the return if such amount is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the Secretary or his delegate of the nature and amount of such item.
*50By their very terms, neither provision applies when “no return” is filed.1 In that event, by virtue of subsection 6501 (c)(3), the Commissioner may assess a tax whenever he chooses:
No return. — In the case of failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
The central problem of this case lies in determining the meaning of the word “return” as used in the statute. Given subsection 6501(e), of one thing we may be sure: A return may on its face omit a substantial amount of gross income— well over twenty percent of the whole, in fact — and still be a “return” within the meaning of section 6501.
In this light, it is curious that the Government makes an argument based .on some “larger rationale” of section 6501, that “the Commissioner should not be limited to a three-year period [for assessment] unless, he is furnished with all of the data necessary to compute a taxpayer’s income.” Whether or not things “should” be this Way is an issue beyond our province; the Government must address its argument to the wisdom of Congress, which has to date provided that the Commissioner has three'years at most for an assessment when he is made aware of eighty percent, not all, of the gross income of a taxpayer.2 It *51is of no significance, then, that the partnership returns filed by Durovic did not disclose his income from other sources.3
Of what other omissions, does the Commissioner complain? In short, his argument is addressed to missing “exemptions, deductions, and credits” to which Durovic may have been due. This contention, however, is naive at best and disingenuous at worst. With no intention of cynicism, I submit that the Commissioner cares not a whit for the deductions or other items which serve to reduce the amount of tax he ultimately receives from taxpayers. Nor should he. His function is to see to it that income is fully reported and that the deductions which are taken do not exceed the proper amount. In what is essentially an adversary scheme, it is left to the taxpayer to assert his entitlement to credits or deductions and to litigate the question of his right thereto when the Commissioner is in disagreement. In mute testimony to this arrangement are the legions of agents and auditors who are employed by the Internal Revenue Service to bring to light unreported income and overstated deductions — not to unearth deductions or credits which the taxpayer may have overlooked. This is not to say, of course, that the agents of the Commissioner will not reveal to a taxpayer a neglected deduction when they come across it. I have no doubt that this is done. My point is simply that the Commissioner is not engaged in that practice as an everyday matter, and that the taxpayer, not the Commissioner, suffers when a return fails to claim or omits information relating to a deduction. The views of the Government, I conclude, are of no help to the majority.
Except to the extent that the statute, soundly construed, reveals what may be omitted from a “return” without depriving it of that status for the purpose of section 6501, the definition of a “return” is not found in the statute. The key to the concept may be found, instead, in Commissioner of Internal Revenue v. Lane-Wells Co., 321 U.S. 219, 64 S.Ct. 511, 88 L.Ed. 684 (1944). The Company in that case had filed a corporate return for each of the fiscal years 1934 through 1936. It did not concurrently file a return as a holding company — a duty imposed on every corporate taxpayer who qualified for an additional tax as a holding company — and expressly denied being a taxable holding company by answering in the negative a question directed to that liability which was set out on the corporate tax forms it filed. In a ruling which reaffirmed the earlier case of Commissioner of Internal Revenue v. Germantown Trust Co., 309 U.S. 304, 60 S.Ct. 566, 84 L.Ed. 770 (1940), the Supreme Court held that the failure of the Company to file for each year a return relating to the tax on it as a holding company brought the case within subsection 276(a) of the Revenue Act of 1934, which allowed assessment “at any time.” The acceptance by the Court of Germantown — which had held that a wrong return which disclosed all of the information upon which a tax could be computed failed to be “no return” within the meaning of subsection 275(c) of the 1932 Revenue Act — was dictated by the fact that the Court of Appeals for the Ninth Circuit had found that the returns filed by Lane-Wells “showed all the facts necessary for the respondent [Commissioner] to compute the taxes as a personal holding company obligation.” Lane-Wells Co. v. Commissioner of Internal Revenue, 134 F.2d 977, 978 (9th Cir. 1943). The Supreme Court held, however, that more than this was needed to make the corporate returns at is*52sue “returns” of the holding company-tax:
But it seems admitted that the returns did not show the facts on which liability would be predicated. Such liability was expressly denied by the return, and to obtain data on which corporations subject to the tax could be identified and assessed was the very purpose of requiring a separate return addressed to that liability. 321 U.S. at 223, 64 S.Ct. at 513.
Here, I submit, is the definition of a “return.” To qualify as such with reference to a particular tax, a completed tax form must disclose “the facts on which liability [for that tax] would be predicated.” How this phrase is to be interpreted in the setting of Lane-Wells is of crucial importance to this case, for if the Court meant that an affirmative response by the Company to the inquiry made on the corporate returns relative to its holding company status would have constituted a disclosure of the “facts” necessary to make the corporate forms “returns” of the holding company tax, I cannot conceive of the reasoning by which the majority affirms this case on the authority of Lane-Wells. Durovic filed partnership returns which disclosed well over $600 of gross income for each of the fiscal years in question. As the majority recognizes, the Commissioner could not have asked for a clearer signal that he was due individual income tax returns from Durovic.4 This disclosure cannot be distinguished from the affirmative answer which the Company could have made in Lane-Wells.
The majority, however, read Lane-Wells to hold that two separate returns must be filed if two are required by the Commissioner, citing a paragraph of the Lane-Wells opinion which makes reference to the importance of “self-assessment” by taxpayers and the need of the Commissioner for the filing of tax information “with such uniformity, completeness, and arrangement that the physical task of handling and verifying returns may be readily accomplished.” Putting aside for the moment the question of the quotation, I submit that the basic position of the majority is in error. Why would the Court have made reference to the failure of the corporate returns to disclose “the facts on which liability would be predicated” if similar returns which had disclosed those facts would nonetheless have been inadequate ? And if the rationale for their view is that the Commissioner is unduly 'burdened by having to make out a second return, I must point out that the Government has not made that complaint to this court, and, too, that the Court in Ger-mantown — recognizing that the Commissioner “prepared from the Form 1041 return, a substitute corporation return on Form 1120,” 309 U.S. at 306, 60 S.Ct. at 567 — did not see fit to abstract from a silent record some need on the part of the Government. I would follow the example of Germantown and let the Government argue its burden if it must.
I turn, finally, to the quotation from Lane-Wells which the majority advance in support of their view. The passage which directly precedes the quotation reads:
Taxpayer says that the information called for by [holding company] Form 1120H is information that could have been called for by Form 1120. We assume so, but we do not see how the fact helps the taxpayer, for the Treasury was fully within the statute in requiring that information in a separate return. 321 U.S. at 223, 64 S.Ct. at 513.
Given this, the concluding sentence of the quotation bears repeating.:
[T]he regulation requiring two separate returns for these taxes was a reasonable and valid one and the finding of the Board of Tax Appeals that *53the taxpayer is in default is correct. 321 U.S. at 224, 64 S.Ct. at 513.
I cannot help but conclude, respectfully, that my colleagues take the quotation out of context. The language by the Court referring to “self-assessment” and the “physical task” of the Commissioner was in response to a challenge to the regulation requiring two separate returns, a particularly inappropriate contention given the rationale which the Court found to underlie the regulation: “[T]o obtain data on which corporations subject to the [holding company] tax could be identified and assessed was the very purpose of requiring a separate return addressed to that liability.” 321 U.S. at 223, 64 S.Ct. at 513. The quotation proffered by the majority cannot, I think, be taken to modify the essential holding of Lane-Wells, namely, that a return of one tax constitutes the return of another if, as to the other tax, the facts upon which liability would be predicated are shown.
There can 'be little doubt that those facts were shown with respect to the individual income tax liability of Durovic by the partnership returns he filed. Whatever hesitance may exist on that score disappears when the reaffirmation of Germantown in Lane-Wells is considered. From what little appears in Germantown, a taxable entity was not in 1932 required to file both a fiduciary and a corporate return. One or the other sufficed.5 It follows that the filing of one of two returns, alternatively required, qualifies under Lane-Wells as a disclosure of the facts upon which liability would be predicated on the unfiled return. In significant contrast, the returns which were filed in this case did not merely suggest that other returns might be due; they each disclosed a fact —gross individual income of over $600— which left no doubt that individual income tax returns were due. Taxpayer, I submit, filed returns of his individual income tax for the fiscal years at issue.6
II
The majority ascribe three reasons to their reluctance to overturn the decision of the Commissioner to file individual returns rather than a joint return for Durovic and his wife. The first of these is contained in this passage:
The Tax Court here reasoned — “had (Mr. and Mrs. Durovic) originally filed individual returns for these years (1954-58), their election in 1965 to file joint returns would have been untimely. We see no reason why the same rule should not obtain where, as here, no returns were originally filed.
I disagree. All that need be cited in answer is a portion of 26 U.S.C. § 6013, the statute which authorizes and regulates the filing of joint returns by husband and wife:
(a) Joint returns. — A husband and wife may make a single return jointly of income taxes under subtitle A, even though one of the spouses has neither gross income nor deductions, except as provided below:
[inapplicable]
* * *
(b) Joint return after filing separate return.—
(1) In general. — Except as provided in paragraph (2), if an individual has filed a separate re*54turn for a taxable year for which a joint return could have been made by him and his spouse under subsection (a) and the time prescribed by law for filing the return for such taxable year has expired, such individual and his spouse may nevertheless make a joint return for such taxable year.
* * X
(2) Limitations for making of elections. — The election provided for in paragraph (1) may not be made—
X X *
(B) after the expiration of 3 years from the last date prescribed by law for filing the return for such taxable year (determined without regard to any extension of time granted to either spouse); . . .
The fact that subsection 6013(b)(2) is specifically limited in application to cases falling within subsection 6013(b)(1), is, to my mind, a quite sufficient reason to distinguish cases where no returns are originally filed and those where an individual “has filed a separate return for a taxable year for which a joint return could have been made by him.” 26 U.S.C. § 6013(b)(1). We are told, however, that Congress intended subsection 6013(b)(2) to have a broader reach than its literal reading would suggest:
Section 6013 prohibits an election after the expiration of three years from the last date prescribed by law for filing the return for each taxable year (without regard to any extensions granted). By no stretch of imagination can this statute be interpreted to mean a complete failure to file erases the date from which the 3-year limitation starts to run. Congress could not have intended to put such power in the hands of a recalcitrant taxpayer, where, as the Tax Court noted, our system of “taxation is based on voluntary disclosure.”7
To what “power” in the recalcitrant taxpayer do my brothers refer? It is, I assume, the power to refuse or neglect to file a return. But I fail to see the reason for reading into section 6013 a purpose to foster voluntary disclosure by a taxpayer when numerous other provisions of the Internal Revenue Code are specifically aimed at his obstinance. See 26 U.S.C. §§ 6651, 7203; 26 C.F.R. § 301.6651-1. Can it be said that the foreclosure of an option to file jointly will appreciably spur a return of tax by a couple who are willing to take the risk of a penalty? I would hesitate so to assert. What lies implicit at the root of the second justification advanced by my colleagues is, I opine, a conviction that the disinclination of a taxpayer to make a voluntary disclosure of his liability may be gauged by his readiness to file a return. This view, however, compounds the error the majority make in dealing with section 6501. As I have demonstrated, a return may disclose only a portion of a taxpayer’s gross income —as little, I suppose, as is needed to show liability — and still be a “return” for the purposes of certain tax laws. Thus, the taxpayer who files a return may be as recalcitrant or dishonest as the one who does not. Add to these observations the fact that the legislative history of section 6013 gives no hint of a Congressional purpose to encourage voluntary disclosure by section 6013, and the conclusion becomes inescapable that subsection 6013(b)(2) must be limited, as it states on its face, to situations where a return which elects individual filing status has been made.
Spanos v. United States, 212 F.Supp. 861 (D.Md.1963), constitutes the final authority in support of the majority decision. The plaintiff in that case, seeking to avoid a fraud penalty based on a return jointly filed by her and her husband, argued that a taxpayer could not legally make a determination to file a *55joint return after its due date. The district court did not agree:
As the Commissioner points out, in the absence of the special factors present in the authorities cited by the taxpayer, administratively the Act has not been construed to bar an initial election made after the due date of a return. 212 F.Supp. at 864 n. 3.
The authorities cited by the taxpayer to which the court made reference were employed to support the following dicta, that upon which the majority rests its holding:
[T]he cases introduce into § 6013 the principle, founded upon equitable considerations, that if an election has been made and acted upon by the Commissioner, or if, as the result of a failure to file a return, the Commissioner has been required to make an election for the taxpayers (or change an election due to a spouse’s valid non-acquiescence), that election may not thereafter be altered. 212 F.Supp. at 863-864.
The most significant point of this statement is that “equitable considerations”— not some statutory construction — are the underpinning of the rule it espouses. The cases upon which the rule rests then, are highly pertinent to determining the kind and nature of equities which arise when an election of filing status is made by the Commissioner.
The eases are three in number: Grant v. Rose, 24 F.2d 115 (N.D.Ga.1928), aff’d Rose v. Grant, 39 F.2d 340 (5th Cir. 1930); Grobart v. Commissioner, 20 T.C.M. 629 (1961); and Mundy v. Commissioner, 14 T.C.M. 1067 (1955). Of these, only Grobart and Mundy are particularly apposite to this case: Rose was a case where taxpayers had made a return and an election of joint filing status. Mundy, moreover, is more remarkable for its absence of principle than its revelation of equities. As here, the taxpayer had failed to file income tax returns for several fiscal years; the Commissioner determined deficiencies for those years and sought to collect tax computed at an individual rate though the taxpayer was married. When the taxpayer complained, the Tax Court upheld the Commissioner by this reasoning:
In the case of a husband and wife living together the income of each (even though one has no gross income) may be included in a single return made by them jointly, in which case the tax shall be computed on the aggregate income, and the liability with respect to the tax shall be joint and several. No joint return may be made if either the husband or wife is a nonresident alien.
Under section 51(b)(1), Internal Revenue Code of 1939, a husband and wife may elect to make a “single return jointly.” That election must be exercised by the taxpayers at the time the return is filed. Therefore, as Joseph A. Mundy filed no income tax returns for these years the split income provisions were never elected by him. 14 T.C.M. at 1072.
Whatever the validity of this statutory interpretation under the Internal Revenue Code of 1939,8 Congress has since deprived it of force by passing subsection 6013(b). It is no longer true that an election to file jointly “must be exercised by taxpayers at the time the return is filed,” and I turn to Grobart in search of the equitable considerations to which Spanos made reference.
The taxpayer in Grobart received in February of 1957 a notice of deficiency from the Commissioner, which computed tax for a number of preceding fiscal years on the basis of individual tax rates. Over two years later, after the taxpayer had gone so far as to have his case docketed in the Tax Court, he and his wife filed joint returns for the years in question. The Tax Court held that the couple was bound by the computation of the Commissioner, citing language from Grant v. Rose, 24 F.2d 115, 118 (N.D.Ga.1928):
“There is nothing in the law to prohibit the choice of joint or separate *56returns according to the result on the taxes to be paid, although husband and wife actually have kept their affairs entirely separate. On the other hand, there is nothing in the act to extend the right of choice beyond the time for making the returns. It is not unreasonable to claim a right to substitute one form of return for the other up to the last day for making returns, but, after that, and especially after the returns have been reviewed and assessments made, there are strong administrative reasons for not permitting the upsetting of the whole basis of calculation. * * * [Italics supplied.]” 20 T.C.M. at 640.
As I have already pointed out in connection with Mundy, the passage of subsection 6013(b) has removed the central premise of this argument. Congress has said, in effect, that the “strong administrative reasons for not permitting the upsetting of the whole basis of calculation” must give way to a taxpayer’s freedom of choice, so long as the taxpayer makes his final election of joint rates within three years of the last legal date for filing his return. That the Commissioner, rather than the taxpayer, has made an initial election of individual tax rates should not, without more, prevent the taxpayer from choosing to be taxed at joint rates; from the Commissioner’s point of view, his election is indistinguishable from one which the taxpayer might originally have made for himself. Should the election of the Commissioner stand three years unchallenged, a different case would be presented. Within that three years, however, Congress has suggested that the equities lie with the taxpayer. It seems, furthermore, highly inequitable to accept an argument by the Commissioner directed to his administrative burden of recomputation when, had he simply determined the amount of income upon which tax was due and let the taxpayer make an election of filing status, the burden could have been avoided. In truth, the Commissioner is making an unwanted and expensive election for a taxpayer and thereafter employing that election to assert that its modification would be burdensome to his agency.9
The Duro vies filed joint income tax returns for the years at issue less than three months after having received a deficiency notice. I doubt that even the Grobart court — which had faced a two year acceptance by a taxpayer of a Commissioner’s election of individual tax rates — would have disallowed those returns. In any event, Grobart, and hence Spanos, are based on old law, the amendment of which has left them little vitality. I would require the Commissioner to compute the tax owed by the Durovics on the basis of joint rates.

. Subsection 6501(e) opens with these words: “Except as otherwise provided in subsection (c)— . .

. The Government is confused in its interpretation of Germantown Trust Co. v. Commissioner of Internal Revenue, 309 U.S. 304, 60 S.Ct. 566, 84 L.Ed. 770 (1940) ; that case did not hold that a “return” must contain all of the data necessary to compute tax or income. Germantown Trust Company had filed in 1932 what was essentially an informational return as a fiduciary of the beneficiaries of a trust which it administered. I say “informational return” because the beneficiaries, not the Company, were liable for tax on trust income. Some three years later, the Commissioner determined that the Company was a corporation and taxable as such. The relevant statutory material in effect at the time was contained in sections 275 and 276 of the Internal Revenue Code of 1932. The former section provided in part:
Except as provided in section 276—
(a) General rule. The amount of income taxes imposed by this title shall be assessed within two years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. * * %
(c) Corporation and Shareholder. If a corporation makes no return of the tax imposed by this title, but each of the shareholders includes in his return his distributive share of the net income of the corporation, then the tax of the corporation shall be assessed within four years after the last date on which any such shareholder’s return was filed.
Section 276, subsection (a), provided:
False return or no return. In the case of a false or fraudulent return with intent to evade tax or a failure to file a return the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
The primary issue raised on appeal to the Supreme Court was whether subsection 275(a) or subsection 275(c) was controlling. The Court went along with the Company, holding precisely this:
It cannot be said that the petitioner, whether treated as a corporation or not, made no return of the tax imposed by the statute. Its return may have been incomplete in that it failed to compute a tax, but this defect falls short of rendering it no return whatever. 309 U.S. at 310, 60 S.Ct. at 569.
The Court, admittedly, was careful to note that the return was incomplete in no other way, citing the fact that the return “contained all of the data from which a tax could be computed and assessed.” 309 U.S. at 308, 60 S.Ct. at 568. But by no exercise of caution could it have held the disclosure of something less would have rendered the fiduciary return “no return” within the meaning of subsection 275(c), for it was presented with a situation of full disclosure. Had, moreover, the Court ruled that an omission of gross income moved a filing from the realm of subsection 275(a) to that of subsection 275(c), its ruling would have had an applicability limited to events occurring before 1934, when section 275 was amended to include, for the first time, the predecessor to subsection 6501 (e)(1)(A). That provision, subsection 275 (c) of the Revenue Act of 1934, 48 Stat. 745 (May 10, 1934), reads as follows:
Omission from Gross Income. If the taxpayer omits from gross income an amount properly includible therein which is in excess of 25 per centum of the amount of gross income stated in the return, the tax *51may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 5 years after the return was filed.
As a final observation, I might add that Germantown held sub silentio that subsection 276(a) — the ancestor of subsection 6501(c) (3) — was inapplicable to the facts of that case.

 This extra-partnership income, the Government concedes, cannot comprise a sum even closely approaching twenty percent of Duro-vic’s gross income for any of the years in question.

. The partnership returns which was filed disclosed Durovic’s name and address; the Commissioner thus had no difficulty in lo-eating Durovic for the purpose of an assessment.

. Were it otherwise, that is, were both required, Germantown and this ease would be indistinguishable except for the irrelevant fact that the forms filed by Durovic were incomplete in minor respects.

. I have not dealt directly with the majority’s argument that my position would make “the running of the statute of limitations . depend upon . . . happenstance.” Taking upon myself the liberty of clarifying this argument, I assume that the “happenstance” to which they refer is whether or not a taxpayer reports all of his gross income. Having done so, I understand the argument no better. While it is true that the applicability of the statute of limitations set out by subsection 6501(a) will be dependent upon a full disclosure of gross income, it is not true that no other statute will appy in the event of less than full disclosure. Either a three-year or six-year limitation would come into play, depending upon whether the taxpayer omits less or more, respectively, than twenty-five percent of the gross income disclosed on his return. 26 U.S.C. § 6501(e).

. For a similar argument see Dritz v. Commissioner, 28 T.C.M. 874, 879-80 (1969), which erroneously suggests that section 6013 gave spouses a “privilege” of making their returns jointly.

. Section 51 of the Internal Revenue Code of 1939, 53 Stat. 27 (Feb. 10, 1939), contained this truncated version of the present section 6013:

. For this reason, I am not convinced that subsection 6013(b) (2) (C) — which precludes the changeover allowed by subsection 6013(b) (1) when a spouse has been mailed a deficiency notice and has filed a petition in the Tax Court — should be viewed as a Congressional intimation of the equities which pertain to cases where the taxpayer has not initially made an election to be taxed at individual rates.