Court Opinion

ID: 4496340
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:48.485474+00
Date Added: 2024-06-11T14:54:08.811760
License: Public Domain

AhtjNdell,
dissenting: I disagree with the majority opinion in so far as it disallows the deduction of dividends of a domestic corporation. The effect of this disallowance is to tax as income an item which the statute intended to exempt. London & Lancashire Insurance Co., Ltd., 34 B. T. A. 295, 298. This anomolous result is spelled out of the taxpayer’s failure to comply with a formality — a formality not prescribed by statute, nor the regulations, nor the face of the return, but buried deep in the schedules on the back of the return and the numerous instructions accompanying it.
The fact here is that not only was a return filed, but two returns were made and filed. A return was made and filed in August 1933 by a deputy collector under section 3176 of the Revised Statutes, which contained on its face a report of dividends from domestic corporations. Schedule H was not filled out in that return. After receiving a 30-day notice from the Commissioner, the taxpayer in December 1933 prepared and filed a return showing income from “Dividends on Stock of Domestic Corporations”, in a larger amount than reported by the deputy collector, and deducting an equivalent amount under the heading of “Dividends (From Schedule H).” Schedule H was not filled out in this return.
*770According to the majority, it is the. omission to fill in schedule H in the return that prompts the disallowance of a deduction permitted by statute and results in the imposition of a tax on income which the statute did not intend to tax. The only information called for by schedule H that was not on the face of the return was the name of the corporation that paid the dividend. This information was furnished to the deputy collector and probably was given by the payor corporation on information returns.
The word “return” as used in the taxing statutes is not a technical word of art. Florsheim Bros. Drygoods Co. v. United States, 280 U. S. 453. We have held a “substantial compliance” with the provisions of law. for the filing of returns is sufficient to put the statute of limitations in motion. See Stetson & Ellison, 11 B. T. A. 397; affd., 43 Fed. (2d) 553. In that case the statute itself required “a return stating specifically the items of * * * gross income and the deductions”, and the regulations contained requirements for detailed figures in the case of consolidated returns. The details so called for were not given, but the totals only were set forth and the return was-held to be sufficient. An administrative'requirement of a second return where the law changed the credit allowable to a corporation does not need to be complied with where the first return gave sufficient data to permit the calculation of tax to be made. See Zellerbach Paper Co. v. Helvering, 293 U. S. 172, wherein it is said, “Perfect accuracy or completeness is not necessary to rescue a return from nullity, if it purports to be a return, is sworn to as such (Lucas v. Pilliod Lumber Co., 281 U. S. 245), and evinces an honest and genuine endeavor to satisfy the law.”
The return filed in this case is said by the majority to be a nullity solely, as I read the report, because it omitted to fill in schedule H. That is the only charge laid at the taxpayer’s door. In my opinion that charge can not stand in the face of the fact of the actual filing of a return which meets the requirements of a return as laid down in the cases cited.
VAN FossaN and Mellott agree with this dissent.