Court Opinion

ID: 8589792
Source: CourtListenerOpinion
Date Created: 2022-11-23 15:45:21.221291+00
Date Added: 2024-06-11T16:54:24.346658
License: Public Domain

Whitaker, Judge,
dissenting:
I cannot agree with the opinion of the majority. It flies in the face of section 188 of the Internal Eevenue Code. That section requires the partner, in computing his income, to include therein his distributive share of the partnership net income. And it is plain that the partnership in computing its net income had to compute it according to the law as it was prior to the passage of the Revenue Act of 1942. Section 101 of that Act says that its provisions are “applicable only with respect to taxable years beginning after December 31, 1941.” The taxable year of the partnership began some time before December 31, 1941, and, hence, the provisions of the Revenue Act of 1942 did not govern the computation of its net income.
So, the law told this partner to include in his income his distributive share of the partnership net income, and it told the partnership to compute its net income according to the law as it was before the 1942 Act was passed.
What more needed to be said? Partner: include in your return your distributive share of the partnership income; partnership: compute your income according to the law as it was before this Act was passed.
But the majority opinion says, disregard this, throw out the partnership return the law required it to file, cast aside the income that return shows and which the law required the partner to use in computing his income, and figure it on another basis. There is no justification for this.
This partner in computing his own individual income was entitled to the provisions of the Act of 1942, but the partnership was not, and, so far as his income from the partnership was concerned, the partner was governed by the law applicable to it. This the Revenue Act of 1942 definitely said.