282 U.S. 375 (1931), 40, Fawcus Machine Co. v. United States

Docket Nº:No. 40
Citation:282 U.S. 375, 51 S.Ct. 144, 75 L.Ed. 397
Party Name:Fawcus Machine Co. v. United States
Case Date:January 05, 1931
Court:United States Supreme Court
 
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Page 375

282 U.S. 375 (1931)

51 S.Ct. 144, 75 L.Ed. 397

Fawcus Machine Co.

v.

United States

No. 40

United States Supreme Court

Jan. 5, 1931

Argued December 12, 1930

CERTIORARI TO THE COURT OF CLAIMS

Syllabus

1. Administrative regulations contemporaneously construing a statute and made for its enforcement under an express general authorization contained therein, and which are not unreasonable or inconsistent with the statute, will not be overruled except for weighty reasons. P. 378.

Page 376

2. In accordance with Article 845 of Treasury Regulations 45, applicable to the Revenue Act of 1918, and which provides that "federal income . . . taxes are deemed to have been paid out of the net income of the taxable year for which they are levied," the Commissioner of Internal Revenue determined that the invested capital for 1919 of a corporate taxpayer which kept its books and made returns on the accrual basis should be reduced, in its return for the taxable year 1919, by the amount of income and excess profits taxes for 1918, as of the dates in 1919 when the installments of taxes fell due and were paid. This computation resulted in an alleged overpayment of excess profits taxes which the taxpayer sued to recover.

Held:

(1) The regulation was reasonable and consistent with the Act of 1918. P. 378.

(2) In view of the facts that the Act of 1917 required the payment of the same sort of taxes; that the petitioner actually accrued its taxes for 1918 and set them up in a reserve at the end of the year; that taxpayers understood that the policy of the government with respect to income and excess profits taxes was continuous, and that a Treasury Decision, in substance the same as Article 845, was applicable to the 1917 Act, the regulation was not unreasonable as applied to 1918 taxes, notwithstanding that the Revenue Act of 1918 was not passed until February, 1919, and the taxpayer could not know at the close of 1918 what the exact amount of its taxes for that year would be. P. 379.

68 Ct.Cls. 784 affirmed.

Certiorari, 281 U.S. 711, to review a judgment of the Court of Claims in favor of the United States in an action brought by a taxpayer to recover an alleged overpayment of excess profits taxes for the year 1919.

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ROBERTS, J., lead opinion

MR. JUSTICE ROBERTS delivered the opinion of the Court.

Certiorari was granted to the Court of Claims to review a judgment in favor of the United States in an action to recover an alleged overpayment of excess profits tax for the calendar year 1919. The petitioner, a corporation, kept its books and made its returns of income and excess profits taxes on the accrual basis. In its return for the year ended December 31, 1919, it did not deduct from invested capital any amount on account of income and excess profits taxes for 1918 assessed and paid in 1919.

The Commissioner of Internal Revenue determined that the invested capital for 1919 should be reduced by the amount of income...

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