Court Opinion

ID: 4491498
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:02:54.845573+00
Date Added: 2024-06-11T15:03:50.172277
License: Public Domain

Black,
dissenting; I disagree with the majority opinion in this proceeding as to the .year 1924. The agreement under which petitioner operated its business in 1924 is set out in full in 18 B. T. A. 1248. Also other facts regarding petitioner’s conduct of its business may be found there. Upon the facts the Board has very properly held that for the- years 1921, 1922, and 1923 petitioner is taxable as a trust. This is on account of the provisions of section 704 of the *735Revenue Act of 1928. In my opinion, section 704 of the 1928 Act has no application to the taxable year 1924 because the facts show that petitioner’s return for that year was filed March 14, 1925. At the time it was filed the Commissioner’s rulings had been materially changed from what they were in former years, following the decision of the Supreme Court of the United States in Hecht v. Malley, 265 U. S. 144. I think that petitioner for the year 1924 is taxable as an association under the decision of Hecht v. Malley, supra.
I can see no material difference in petitioner’s operation for the year 1924 under the trust instrument set out in 18 B. T. A. 1248, from that of the concerns which we held in Lansdowne Realty Trust, 20 B. T. A. 119; Russell Tyson et al., 20 B. T. A. 597; and Zenith Real Estate Trust, 21 B. T. A. 656, to be associations and taxable as such.
In the Russell Tyson case, supra, we said:
It was undoubtedly the intention of Congress in enacting section 704(a) of the Revenue Act of 1928, to give relief to trusts which prior to the decision of the United States Supreme Court in Hecht v. Malley, supra, had filed returns as trusts. It was also the evident intent of Congress from the date of that decision, if they functioned as an association, to tax them as such. See also J. W. Pritchett et al., 17 B. T. A. 1056.
I think that the facts in this proceeding show that for the year 1924 petitioner functioned as an association and should be taxed as such. The mere fact that petitioner operated through a sole trustee does not change the situation. The important thing was that the subscribers and the sole trustee were the beneficiaries and operated their business as an association — -under the so-called trust agreement.
MoRRis, Marquette, Sternhagen, Murdock, McMahon, and Matthews agree with this dissent.