Smith v. Commissioner

Board of Tax Appeals

Smith v. Commissioner

42 B.T.A. 505, 1940 BTA LEXIS 991

CourtUnited States Board of Tax Appeals

DecidedAugust 9, 1940

DocketDocket Nos. 65717, 71888, 75858.

StatusPublished

Cited by6 cases

This text of 42 B.T.A. 505 (Smith v. Commissioner) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Smith v. Commissioner, 42 B.T.A. 505, 1940 BTA LEXIS 991 (bta 1940).

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SUPPLEMENTAL OPINION.

MtjRdock :

The Board promulgated findings of fact and an opinion in this case. See 40 B. T. A. 387. It then entered its decision on October 31,1939. Thereafter, on January 8,1940, the Supreme Court decided a case of this same taxpayer for another year. Higgins v. Smith, 308 U. S. 473. The Board, upon motion of the Commissioner, vacated its decision to consider the possible effect of the Supreme Court decision upon the Board decision. See order of January 18, 1940. The parties were heard and they filed briefs. The Board now concludes that the decision of the Supreme Court requires modification of the decision of the Board in one respect and in only one respect.

The petitioner argues that we have no power to change our original decision. That decision was vacated before it became final, before the taking of an appeal, and before the time for appeal had expired. If the Board correctly interprets the Supreme Court decision, then the vacation was proper because it permits the Board to correct an error which would otherwise justify an appeal. The Board believes that it has jurisdiction and deems the question of the timeliness of the Commissioner’s motion unimportant under the circumstances.

The Board allowed the petitioner deductions for losses in 1929 upon sales of, stock by the petitioner to his wholly owned corporation, Innisfail. The Supreme Court disallowed deductions for losses from similar sales in 1932 upon the ground that such transactions were too insubstantial to give rise to deductible losses. That decision is controlling here, and upon its authority we hold that the petitioner is not entitled to deductions for the losses of $48,811 and $39,240 claimed for 1929 upon the sales of 1,900 shares of Hudson Motor Car Co. common and 1,000 shares of Aldebaran Corporation stock to Innisfail. The decision does not require complete disregard of the separate corporate entity, Innisfail, for tax purposes and we are not disposed to go further than has the Supreme Court.

Reviewed by the Board.

Decisions will he entered under Rule 50 and those for 1930 and, 1931 will he in the same amounts as were entered on October 31,1939.

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SUPPLEMENTAL OPINION.

MtjRdock :

The Board promulgated findings of fact and an opinion in this case. See 40 B. T. A. 387. It then entered its decision on October 31,1939. Thereafter, on January 8,1940, the Supreme Court decided a case of this same taxpayer for another year. Higgins v. Smith, 308 U. S. 473. The Board, upon motion of the Commissioner, vacated its decision to consider the possible effect of the Supreme Court decision upon the Board decision. See order of January 18, 1940. The parties were heard and they filed briefs. The Board now concludes that the decision of the Supreme Court requires modification of the decision of the Board in one respect and in only one respect.

The petitioner argues that we have no power to change our original decision. That decision was vacated before it became final, before the taking of an appeal, and before the time for appeal had expired. If the Board correctly interprets the Supreme Court decision, then the vacation was proper because it permits the Board to correct an error which would otherwise justify an appeal. The Board believes that it has jurisdiction and deems the question of the timeliness of the Commissioner’s motion unimportant under the circumstances.

The Board allowed the petitioner deductions for losses in 1929 upon sales of, stock by the petitioner to his wholly owned corporation, Innisfail. The Supreme Court disallowed deductions for losses from similar sales in 1932 upon the ground that such transactions were too insubstantial to give rise to deductible losses. That decision is controlling here, and upon its authority we hold that the petitioner is not entitled to deductions for the losses of $48,811 and $39,240 claimed for 1929 upon the sales of 1,900 shares of Hudson Motor Car Co. common and 1,000 shares of Aldebaran Corporation stock to Innisfail. The decision does not require complete disregard of the separate corporate entity, Innisfail, for tax purposes and we are not disposed to go further than has the Supreme Court.

Reviewed by the Board.

Decisions will he entered under Rule 50 and those for 1930 and, 1931 will he in the same amounts as were entered on October 31,1939.

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42 B.T.A. 505, 1940 BTA LEXIS 991, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-commissioner-bta-1940.

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