Commissioner of Internal Revenue

“ A proper book or docket must be carefully kept in the office of the commissioner of internal revenue, in which should be entered, under its proper date, the name of the claimant, with the amount of the tax which is the subject of appeal, and the final decision of the said commissioner. ”

“ The Commissioner of Internal Revenue held that, in determining income, the gross overriding commissions on business written during the year should not be subjected to any deduction on account of cancellations expected to occur in later years. The taxpayer contends that either the gross overriding commissions should be subjected to such a deduction of that parts of the gross overriding commissions should be allocated as earnings of future years. ”

“ All that we decide is that a liability cannot be fastened upon the collector, a ministerial officer, for the enforcement of an assessment for taxes regular on its face, made by the commissioner of internal revenue. ”

“ Moreover, the complexity of the Commissioner's approach ill serves the goal of administrative convenience that underlies the realization requirement. In order to apply the Commissioner's test in a principled fashion, the Commissioner and the taxpayer must identify the relevant market, establish whether there is a regulatory agency whose views should be taken into account, and then assess how the relevant market participants and the agency would view the transaction. ”

“ The majority opinion faults the Commissioner for having 'commingled two distinct * * * concepts of tax accounting depreciation of an asset through wear and tear or gradual expiration of useful life and fluctuations in the value of that asset through changes in price levels or market values.' In my opinion these two concepts, as used in the Internal Revenue Code, are necessarily commingled and it is unrealistic to expect that one can be isolated from the other. ”

“ I think there is no merit in the taxpayer's theory that the Commissioner must disregard the corporate entity of the subsidiary. If a taxpayer itself creates and uses a corporation, he cannot require the Commissioner to say it isn't there. ”

“ See Spring City Foundry Co. v. Commissioner of Internal Revenue, 292 U.S. 182, 185, 54 S.Ct. 644, 78 L.Ed. 1200; compare Washington Land Co. v. Com'r of Internal Revenue, 10 B.T.A. 503; Atlantic Coast Realty Co. ”

“ Commissioner of Internal Revenue, 2 Cir., 175 F.2d 711, 713-714 (where an overcharge under the Emergency Price Control Act, 50 U.S.C.A.Appendix, § 901 et seq., was allowed to be deducted because it did not frustrate any 'sharply defined policies' of the Act) . ”

“ His contention-and upon no other ground could his claim be sustained-is, that, without reference to the rate of commissions which purchasers received, although it may have been the highest allowed, he was, nevertheless, given by the statute, to his own use, and as his personal allowance or compensation for distributing stamps, under sect. 170, the highest rate of commissions allowed to any one buying from the Commissioner of Internal Revenue. ”

“ If the Commissioner chooses not to stand on his own formal or detailed requirements, it would be making an empty abstraction, and not a practical safeguard, of a regulation to allow the Commissioner to invoke technical objections after he has investigated the merits of a claim and taken action upon it. Even tax administration does not as a matter of principle preclude considerations of fairness.
Since, however, the tight net which the Treasury Regulations fashion is for the protection of the revenue, courts should not unduly help disobedient refund claimants to slip through it. ”

“ The Commissioner, with the approval of the Secretary, is authorized to prescribe all needful rules and regulations for the enforcement of this Act.'
Sections 41, 42, and 62, Revenue Act of 1928, c. 852, 45 Stat. 791 (26 USCA §§ 2041, 2042, 2062) , are substantially like corresponding ones quoted from the 1924 act. Similar provisions appear in the Revenue Act of 1918 and all subsequent ones. ”

“ Once the Commissioner produces evidence linking the taxpayer to an income-producing activity, the presumption of correctness applies and the burden of production shifts to the taxpayer to rebut that presumption by establishing that the Commissioner’s determination is arbitrary or erroneous. ”

“ If a depreciable asset is sold for less than its adjusted basis, it would seem to follow from the Commissioner's construction that the asset has 'cost' the taxpayer an additional amount and that further depreciation should be permitted. However, Revenue Ruling 69-92 does not extend to such a case and the Commissioner had expressly refused to make it do so. ”

“ But to recognize the increment in value as affecting earnings and profits would no more harmonize with the taxless character of the transaction than to treat a realized gain as doing so. The same policy which carries over the transferor's basis for purposes of the corporation's income tax, § 113 (a) (8) , requires carrying it over for determining the taxability of its distributions as the Commissioner's regulation directs: gains and losses are to be brought into earnings and profits at the time and 'to the extent' that they are recognized under § 112. ”

“ The collection of taxes clearly should not be made to depend on the vicissitudes of litigation with third parties in which the taxpayer may be engaged. That is quite a different thing, however, from holding that the Commissioner may force taxpayers to abandon reasonable and accurate methods of accounting simply because they do not reflect advance receipts as income in the year received. ”

“ Instead, as the excerpts set out above illustrate, this history shows to our satisfaction that the Congress intended an exception to the usual three-year statute of limitations only in the restricted type of situation already described.
We think that in enacting § 275 (c) Congress manifested no broader purpose than to give the Commissioner an additional two years to investigate tax returns in cases where, because of a taxpayer's omission to report some taxable item, the Commissioner is at a special disadvantage in detecting errors. ”

“ Grossman, Investment Principles and Practice 14 (1939) ; Noble, Accounting Principles 447 (4th ed. 1945) . And see Old Colony R. Co. v. Commissioner of Internal Revenue, 1932, 284 U.S. 552, 555, 52 S.Ct. 211, 212, 76 L.Ed. 484; New York Life Ins. Co. ”

“ Funds made available by this or any other Act to the Internal Revenue Service shall be available for improved facilities and increased staffing to provide sufficient and effective 1–800 help line service for taxpayers. The Commissioner shall continue to make improvements to the Internal Revenue Service 1–800 help line service a priority and allocate resources necessary to enhance the response time to taxpayer communications, particularly with regard to victims of tax-related crimes. ”

“ Congress has given discretion to the Commissioner to prescribe by regulation forms of returns and has made it the duty of the taxpayer to comply. It thus implements the system of selfassessment which is so largely the basis of our American scheme of income taxation. ”

“ It is unnecessary for us to take so broad a ground, even if it is correct. [2] Dealing only with the particular presumption now before us, we find nothing to indicate that Congress attached exceptional probative value to the margin evidence, or that it desired for any other reason to tilt the scales sharply against the Commissioner rather than merely to even them somewhat in behalf of claimants. There is, for example, no reason to suppose that the Commissioner is better able than the processor to prove where the tax burden fell. ”

“ It seems entirely proper for the Commissioner not only to provide for a reasonable allowance for depletion when advance royalties are paid but also to provide for the situation when the expected depletion did not take place. Annual deductions were made by the taxpayer from his income. These were allowed to compensate for the exhaustion of capital. An event occurred in 1937, the termination of the lease, which restored the deductions for depletion to income. This requirement is, we think, within the delegation of authority to the Commissioner. ”

“ The Commissioner attempts further to explain away the authority aligned against him by stating that most of the cases and rulings prior to 1942 (when capital gain treatment was provided for sales above adjusted basis) are irrelevant since the gain on sale was taxed at the same ordinary income rate that would have been applied had depreciation been disallowed. This contention does not explain away the Commissioner's sudden decision that allowance of such depreciation involves a fundamental error in the basic concept of depreciation. ”

“ The years 1944 and 1945 were years of profit for the taxpayer. For the years 1946 and 1947, the taxpayer incurred net operating losses which were allowed by the Commissioner as carry-back deductions to the years 1944 and 1945. The taxpayer sought to augment its net operating loss for 1946 by the amount of excess profits taxes which it paid in 1946 on account of its 1945 excess profits tax liability. The Commissioner disallowed the deduction and the Tax Court sustained the Commissioner. ”