Court Opinion

ID: 9654107
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:06:14.96273+00
Date Added: 2024-06-11T18:13:05.928874
License: Public Domain

MADDEN, Judge (dissenting).
I think section 3801 is not applicable. Everything that the plaintiff did, it did by its own choice, and not because the taxing authorities required it to do so. In 1941 the plaintiff elected to use LIFO in computing its inventory of raw cotton in bales, and another method for the rest of its inventory. In 1948 it elected to use LIFO for all its inventory. According to the applicable regulation, having so elected, it was required to use this method for previous years not closed by agreement. We are not informed as to whether this really meant that a taxpayer could, after any number of years of experience, look back over his tax situation and, if he saw that he would have saved money by the different election, reopen all those years and get his money back. If this is so, it is not consistent with much that the Supreme Court has said about the necessity that the Government know what its revenues are, as nearly as possible on a year to year basis.
A more supportable view would be that the taxpayer should recompute his taxes for previous years not closed by agreement, nor by the running of the Statute of Limitations against the taxpayer or the Government, as the case might be. Of course, if- the statute and regulations as to inventories repealed, pro tanto, the Statute of Limitations, then the plaintiff should recover, but not because of the doctrine of section 3801.
The case of Gooch Milling & Elevator Co. v. United States, 78 F.Supp. 94, 111 Ct.Cl. 576, on which the court relies in its opinion, was not like the instant case. In Gooch, the Commissioner of Internal Revenue assessed additional taxes against the taxpayer for the year 1936 because of an error which the taxpayer had made in including in its inventory wheat not owned. The taxpayer then said that if the Commissioner’s correction of the 1936 inventory was right, it meant that the taxpayer had a smaller closing inventory and less taxable income for 1935. The court applied section 3801, and allowed the taxpayer to recover though the period of the Statute of Limitations had elapsed. There the inconsistency between the treatment of the 1936 income and the 1935 income was forced upon the taxpayer by the action of the Commissioner with regard to the 1936 income. In the instant case the re-computation of the income for the earlier years occurred as a result of the taxpayer’s own election. I think that section 3801 does ’ not give one the privilege, where the Commissioner has done nothing with regard to his taxes, to unilaterally elect that he may have a refund of *487taxes though the Statute of Limitations has run.
I do not understand the court’s statement that the Commissioner took inconsistent positions in denying refunds for the earlier years and granting them for the later years. The only reason for the different treatment was the Statute of Limitations. It had nothing to do with methods of computing inventory. Surely the Commissioner does not open the situation for the application of section 3801 every time he decides that some of a taxpayer’s claims for refund áre barred by limitation and some are not.
JONES, Chief Judge, joins in the foregoing dissenting opinion.