Court Opinion

ID: 8595519
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:02:39.948922+00
Date Added: 2024-06-11T16:54:54.027402
License: Public Domain

Durfee, Senior Judge,
dissenting:
I agree that the real question is not whether the Commissioner’s exercise of discretion in Bev. Bul. 68-630 issued in 1968 was reasonable, and that it should not be applied retroactively to the taxable years 1961 and 1963. However, to say that “the real question * * * is, whether the notes are ‘Government insured’ under Mim,. 6%09” does not thereby eliminate our required standard of review in section 166 bad debt reserve cases as stated in Kirtz v. United States, 157 Ct. Cl. 824, 832, 304 F. 2d 460, 464 (1962) :
Since by the terms of the statute the taxpayer is allowed to deduct its actual bad debts as a matter of right, but an addition to a reserve for estimated bad debts “in the discretion of the Secretary or his delegate” the issue is whether the exercise of discretion l>y the Commissioner of Internal Revenue was reasonable. * * * [Emphasis added].
Even accepting as reasonable plaintiff’s interpretation of the term “Government insured loans” to mean Federal *23Government loans is not enough, to entitle plaintiff to prevail in this case.
* * * It does not follow that if the plaintiff was reasonable in its determination the defendant was unreasonable. The burden is on the plaintiff to show that the Commissioner was unreasonable, and absent this showing we will not assume that there has been an abuse of discretion. * * * Kirtz v. United States, supra, 157 Ct. Cl. at 832, 304 F. 2d at 464.
I can find nothing to show that the Commissioner abused his discretion in applying the prohibition against the inclusion of “Government insured loans” in a taxpayer’s loan base to plaintiff’s inclusion of its 1961 and 1963 New York State loans in its loan base in those years for computation of its bad debt reserve deduction.
Plaintiff has produced no evidence showing any history of loan default on the part of New York State or its agencies, or that such loans contained any greater element of risk than Federal loans.
Unconvinced that the Commissioner abused his discretion in this case, I would grant defendant’s cross-motion for summary judgment.