HARRISON H. BOYCE v. THE UNITED STATES

[No. 42954]

[86 C. Cls. 114; 305 U. S.

1

Income tax; power of Special Advisory Committee; decided December 6, 1937.

Petition for writ of certiorari denied by the Supreme Court, October 10, 1938.

WILLIE CROCKETT WRIGHT, ADMINISTRATRIX V. THE UNITED STATES

[No. 248-A]

[86 C. Cls. 290; 305 U. S. -]

Contract for use of inventions, decided March 7, 1938. Petition for writ of certiorari denied by the Supreme Court, October 10, 1938.

ROBERT V. MORSE v. THE UNITED STATES

[No. 43055]

[86 C. Cls. 649; 305 U. S. -1

Validity of patents, etc.; decided April 4, 1938.

Petition for writ of certiorari denied by the Supreme Court, October 10, 1938.

JOHN M. PERRY v. THE UNITED STATES

[No. 42676]

[Ante p. 182; 305 U. S. -1

Redemption of Liberty Loan gold bond; decided May 2,

1938.

Petition for writ of certiorari denied by the Supreme Court, October 10, 1938.

109870-39-c.c.-vol. 87- 49

CHICAGO TELEPHONE SUPPLY CO. v. THE
UNITED STATES

[No. 43657]

[Ante p. 425; 305 U. S.-]

Capital stock and excess profits tax; decided May 31, 1938. Petition for writ of certiorari denied by the Supreme Court, October 10, 1938.

JACOB RUPPERT, A CORPORATION, v. THE
UNITED STATES

[No. M-371]

[86 C. Cls. 396; 305 U. S. —]

Income tax; deduction of bad debts, etc.; decided March 7, 1938.

Petition for writ of certiorari denied by the Supreme Court, October 10, 1938.

MOSES SCHEUER ET AL. v. THE UNITED STATES

[No. M-110]

[85 C. Cls. 592; 305 U. S. -]

Excess profits tax; decided November 1, 1937.

Petition for writ of certiorari denied by the Supreme Court, October 10, 1938.

INGRAM DAY LUMBER COMPANY, A CORPORATION, v. THE UNITED STATES

[No. 43826]

[Ante p. 468; 305 U. S. -]

Liability of the United States under the Conformity Act; condemnation proceedings; decided June 6, 1938.

Petition for writ of certiorari denied by the Supreme Court, October 24, 1938.

ARTHUR C. HARVEY CO. v. THE UNITED STATES

[No. 42473]

[Ante, p. 320; 305 U. S. -]

Income tax; suit not begun within required two years; account stated; authority of Commissioner; res adjudicata; decided May 31, 1938.

Petition for writ of certiorari denied by the Supreme Court, November 7, 1938. Rehearing denied by the Supreme Court, December 5, 1938.

GEORGE W. HELME COMPANY v. THE UNITED

STATES

[No. 42999]

[Ante, p. 474; 305 U. 8. -]

Income tax; discrimination against corporations doing business solely within the United States; constitutionality of the 1928 Revenue Act; decided July 5, 1938.

Petition for writ of certiorari denied by the Supreme Court, November 7, 1938. Rehearing denied by the Supreme Court, December 12, 1938.

M. E. BLATT COMPANY, PETITIONER, v. THE UNITED STATES

[No. 43592. Decided May 31, 1938. Ante, p. 413]

Certiorari to review a judgment of the Court of Claims dismissing the petition of plaintiff for refund of income tax. The judgment of the Court was reversed, December 5, 1938 (305 U. S. 267), the Supreme Court stating:

Petitioner paid, and in this suit seeks to recover, an amount included in a deficiency assessment made by the Commissioner of Internal Revenue as additional income tax for the year ending January 31, 1932. The question is whether petitioner is liable under the Revenue Act of 1932.

For itself and a subsidiary corporation, petitioner made consolidated returns. The commissioner added to the income of the subsidiary on account of improvements made to its property by a lessee. He ruled the improvements were income to lessor in that year to the extent of their value at termination of lease. * * *

For the year in question, the commissioner added to income of lessor $1,742.31, one-tenth of the cost so depreciated (over the term of the lease.) The resulting additional tax was $211.61. Petitioner paid it; the commissioner disallowed claim for refund. The lower court held petitioner not entitled to recover; it sustained the tax on the ground that, immediately upon completion of the improvements made by lessee, they became the property of lessor, and constituted compensation paid by lessee, as additional rental for the use of the leased premises.

Concretely, the question presented is whether, under the lease here involved, one-tenth of what the commissioner and taxpayer call and agree to be estimated depreciated value, as of the end of the term, was income to the petitioner in the first year of the term. And that question is to be decided upon the lower court's findings unaffected by any statement of fact, reasoning or conclusion that may be found in its opinion.

*

There is nothing in the findings to suggest that cost of any improvement made by lessee was rent or an expenditure not properly to be attributed to its capital or maintenance account as distinguished from operating expense. * Even when required, improvements by lessee will not be deemed rent unless intention that they shall be is plainly disclosed. The facts found are clearly not sufficient to sustain the lower court's holding to the effect that the making of improvements by lessee was payment of rent.

It remains to be considered whether the amount in question represented taxable income, other than rent, in the first year of the term.

The findings fail to disclose any basis of value on which to lay an income tax or the time of realization of taxable gain, if any there was.

Granting that the improvements increased the value of the building, that enhancement is not realized income of lessor. Treasury regulations can add nothing to income as defined by Congress.

But, assuming that at some time value of the improvements would be income of lessor, it cannot be reasonably

assigned to the year in which they were installed.
It may be assumed that, subject to the lease,
lessor became owner of the improvements at the time
they were made. But it had no right to use or dispose
of them during the term. Mere acquisition of that sort
did not amount to contemporaneous realization of gain
within the meaning of the statute.

Mr. Justice Butler delivered the opinion of the court.
Mr. Justice Stone delivered a separate opinion, as follows:

I acquiesce in that part of the Court's opinion which construes the findings below as failing to establish that the lessees' improvements resulted in an increase in market value of the lessor's land in the taxable year. As it is unnecessary to decide whether such increase, if established, would constitute taxable income of the lessor, I do not joint in so much of the opinion as, upon an assumption contrary to the findings, undertakes to discuss that question.

HAROLD T. WHITE, ALEXANDER M. WHITE, JR., AND WILLIAM I. FROTHINGHAM, AS EXECUTORS OF THE ESTATE OF ALEXANDER M. WHITE, PETITIONERS, v. THE UNITED STATES [No. 43001. Decided December 6, 1937. Plaintiffs' motion for new trial overruled March 7, 1938. 86 C. Cls. 125]

HAROLD T. WHITE, SOLE SURVIVING EXECUTOR OF THE ESTATE OF WILLIAM A. WHITE, PETITIONER, v. THE UNITED STATES.

[No. 43002. Decided December 6, 1937. Plaintiff's motion for new trial overruled March 7, 1938. 86 C. Cls. 125.]

Certiorari to review judgment of the Court of Claims dismissing the petitions of plaintiffs for refund of income tax. The judgment of the Court was affirmed, December 5, 1938, (305 U. S. 281) the Supreme Court stating:

The question decisive of this case is whether, under Secs. 23 and 101 of the Revenue Act of 1928, 45 Stat. 791, upon a liquidation of a corporation, stockholders' losses from their investment in its stock, held for more than two years, are ordinary losses deductible in full from