Court Opinion

ID: 4492885
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:03:39.043927+00
Date Added: 2024-06-11T07:59:35.571318
License: Public Domain

Love,
concurring: I concur in the prevailing opinion in this case, but as it is based entirely on the opinion and decision in the Stoek-holms Enskilda Bank case, and as I believe that case, while correct in result, was based on unsound grounds, I here desire to set forth my views.
I agree with the dissenting opinion of Smith, Member, on the proposition that the Government of the United States is a resident within the territorial limits of the United States.
As pointed out by the Supreme Court in Van Brocklin v. State of Tennessee, 117 U. S. 151, the Government of the United States is a. “ great corporation,” ordained and established by the American people in their sovereign capacity as an agency of government, to exercise, and empowered to exercise, on behalf of the sovereign, certain governmental functions, and that “ corporation’s ” domicile, or residence, is within, and coextensive with, the territorial limits of the United States. See United States v. Borcherling, 185 U. S. 223.
I do not agree with the result of the Smith dissenting opinion or, with the ground upon which the Stoekholms Enskilda Bank case was decided, for the reason that, even assuming for the sake of argument that the words “ obligations of residents, corporate or otherwise” used in section 217 (a)(1), supra, could be construed as meaning “ obligations of the United States,” it has been held, in American Viscose Corp. v. Commissioner, 56 Fed. (2d) 1033, that a refund by the United States of illegal taxes was not an “ obligation of the United States ” and that, therefore, the interest received by the Viscose Corporation on such refund was not exempt from taxation under section 213 (b) (4) of the Revenue Act of 1926, which provided that “ the term ‘ gross income ’ does not include the following items, which shall be exempt from taxation * * * interest upon * * * (C) the obligations of the United States * *
That issue was the controlling issue in the case, and the Supreme Court denied certiorari on October 10, 1932.
In the instant case, section 233 (b) provides that “In the case of a foreign corporation, gross income means only gross income from *228sources within the United States, determined * * * in the manner provided in section 217.” Section 217 (a) provides that “the following items of gross income shall be treated as income from sources within the United States: (1) Interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise ” and subdivision (c) provides that, “ The following items of gross income shall be treated as income from sources witKout the United States: (1) Interest other than that derived from sources within the United States as provided in paragraph (1) of subdivision (a) * * In other words, unless the interest in the instant case be brought within the provisions of section 217 (a) (1), supra, it is not subject to tax under the specific provisions of the statute. The interest in question was not interest on a bond or a note, and, as decided in the American-Viscose Gorp. case, it was not interest upon an “ obligation of the United States.” The term “ obligation ” can not mean one thing under section 213 and an entirely different thing under section 217 of the same act.
Black agrees with this concurring opinion.