Court Opinion

ID: 9653182
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:40:33.799546+00
Date Added: 2024-06-11T18:12:56.856092
License: Public Domain

MORTON, Circuit Judge
(concurring).
I eoncur in the result — but for reasons different from those stated in the opinion. The cost of the property may, for present purposes, be regarded as its value on March 1, 1913. That amount, less depreciation taken at the Commissioner’s figures, is $99,466.-67. ' Tho net sale price was $175,125'. The Commissioner taxed the difference as profit. The petitioner complains that he was not allowed a deduction of about $66,627, the adjusted value of improvements made on the property by the lessee. The Commissioner and the Board of Tax Appeals disallowed the deduction, because the amount which it represented had never been reported as income by the petitioner.
My brethren think that the petitioner’s “failure, however innocent, to report this income constituted in effect a statement that no such income was received.” I am unable to persuade myself that this is sound as applied to the ease before us. Mr. Crane, who appears not to have been actuated by any fraudulent intent to evade taxation, evidently elected in good faith to let his gain or loss under the lease ride along until the termination of it.
If the regulation of 1918 is valid — as to which I have doubts which are not lessened by the subsequent changes in it — ho may in faet have had no such right of election if the Commissioner objected. But tho Commissioner does not object. As we said in the Moran Case on very similar facts, the taxpayer having made his election and acted on it, and the Commissioner having accepted his position, and rights having become fixed, the taxpayer *642was not at liberty to change Ms mind and repudiate the position which he had taken. Moran v. Commissioner (C. C. A. November 10, 1933) 67 F.(2d) 601. The sale of tbe property by Mr. Crane bad, for present purposes, the same effect as the termination of the lease; it fixed Ms gain from the transaction. The gain thereupon became taxable as income, or as profits, in tbe year in wbieh it was received. I mention tMs divergence of view because I fear that the ground taken in the opinion may lead to difficulties with the statute of limitations.