Burnet v. Building Corporation, No. 475

CourtUnited States Supreme Court
Writing for the CourtMcREYNOLDS
Citation77 L.Ed. 861,53 S.Ct. 428,288 U.S. 406
PartiesBURNET, Commissioner of Internal Revenue, v. S. & L. BUILDING CORPORATION
Docket NumberNo. 475
Decision Date13 March 1933

288 U.S. 406
53 S.Ct. 428
77 L.Ed. 861
BURNET, Commissioner of Internal Revenue,

v.

S. & L. BUILDING CORPORATION.

No. 475.
Argued Feb. 10, 1933.
Decided March 13, 1933.

Page 407

The Attorney General and Mr. Whitney North Seymour, of Washington, D.C., for petitioner.

Mr. Leo H. Hoffman, of New York City, for respondent.

[Argument of Counsel from page 407 intentionally omitted]

Page 408

Mr. Justice McREYNOLDS delivered the opinion of the Court.

The respondent, building corporation, sought redetermination of deficiency income taxes for 1924 and 1925. The Board of Tax Appeals sustained the Commissioner's final action of June 17, 1930; the court below reversed its judgment. 60 F.(2d) 719. The point now in controversy has relation to the distribution for taxation of income derived from sales on the installment plan of two pieces of real estate on Eighty-Second and Eighty-Third streets, New York City. Each was covered by one or more mortgages which the purchaser assumed.

Page 409

The Revenue Act 1926, c. 27, 44 Stat. 9, 23, 39, 41, § 230 (26 USCA § 981 note), lays a tax upon the net income of corporations. Section 232 (26 USCA § 984) provides: 'In the case of a corporation subject to the tax imposed by section 981 of this title (230) the term 'net income' means the gross income as defined in section 985(233) less the deductions allowed by sections 986(234) and 937(206), and the net income shall be computed on the same basis as is provided in subdivisions (b) and (d) of section 953(212) or in section 968(226).'

Sec. 212 '(b) The net income shall be computed * * * in accordance with the method of accounting regularly employed in keeping the books of such taxpayer; but * * * if the method employed does not clearly reflect the income, the computation shall be made in accordance with such method as in the opinion of the Commissioner does clearly reflect the income. * * *

'(d) Under regulations prescribed by the commissioner with the approval of the Secretary, a person who regularly sells or otherwise disposes of personal property on the installment plan may return as income therefrom in any taxable year that proportion of the installment payments actually received in that year which the total profit realized or to be realized when the payment is completed, bears to the total contract price. In the case (1) of a casual sale or other casual disposition of personal property for a price exceeding $1,000, or (2) of a sale or other disposition of real property, if in either case the initial payments do not exceed one-fourth of the purchase price, the income may, under regulations prescribed by the Commissioner with the approval of the Secretary, be returned on the basis and in the manner above prescribed in this subdivision. As used in this subdivision the term 'initial payments' means the payments received in cash or property other than evidences of indebtedness of the purchaser during the taxable period in which the sale or other disposition is made.' (26 USCA § 953(b, d).

Page 410

Sec. 1208. 'The provisions of subdivision (d) of section 953 of this title (212) shall be retroactively applied in computing income under the provisions of * * * the Revenue Act of 1924. * * *' (26 USCA § 953a).

Treasury Regulations 69, Article 44, promulgated August 28, 1926—as amended in 1929:—

'Art. 44. Sale of Real Property Involving Deferred Payments. Under section 212(d) deferred-payment sales of real property fall into two classes when considered with respect to the terms of sale, as follows: (1) Sales of property on the installment plan, that is, sales in which the payments received in cash or property other than evidences of indebtedness of the purchaser during the taxable year in which the sale is made do not exceed one-fourth of the purchase price.

'(2) Deferred-payment sales not on the installment plan, that is, sales in which the payments received in cash or property other than evidences of indebtedness of the purchaser during the taxable year in which the sale is made exceed one-fourth of the purchase price.

'Sales falling within class (1) and class (2) alike include (a) agreements of purchase and sale which contemplate that a conveyance is not to be made at the outset, but only after all or a substantial portion of the purchase price has been paid, and (b) sales where there is an immediate transfer of title, the vendor being protected by a mortgage or other lien as to deferred payments.

'In the sale of mortgaged property the amount of the mortgage, whether the property is merely taken subject to the mortgage or whether the mortgage is assumed by the purchaser, shall be included as a part of the 'purchase price,' but the amount of the mortgage, to the extent it does not exceed the basis to the vendor of the property sold, shall not be considered as a part of the 'initial payments' or of the 'total contract price,' as those terms are used in section...

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58 practice notes
  • Fort Howard Corp. & Subsidiaries v. Comm'r of Internal Revenue, No. 6362–92.
    • United States
    • United States Tax Court
    • August 24, 1994
    ...Corp. v. Commissioner, 19 B.T.A. 788, 795 (1930), revd. on other grounds 60 F.2d 719 (2d Cir.1932), revd. Burnet v. S & L Bldg. Corp., 288 U.S. 406 (1933); Lovejoy v. Commissioner, 18 B.T.A. 1179, 1182 (1930); Simmons Co. v. Commissioner, 8 B.T.A. 631 (1927), affd. 33 F.2d 75 (1st Cir.1929)......
  • Lychuk v. Comm'r of Internal Revenue, No. 11794–99
    • United States
    • United States Tax Court
    • May 31, 2001
    ...19 B.T.A. 788, 795–796 (1930), revd. on other grounds 60 F.2d 719 (2d Cir.1932), revd. sub nom. Burnet v. S. & L. Bldg. Corp., 288 U.S. 406, 53 S.Ct. 428, 77 L.Ed. 861 (1933); compare Anover Realty Corp. v. Commissioner, 33 T.C. 671, 675, 1960 WL 1065 (1960), wherein we stated: It is not th......
  • Kingan & Co. v. Smith, No. 1851.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
    • December 10, 1936
    ...necessary to carry into effect the provisions of the act. In the case of Burnet, Commissioner, v. S. & L. Building Corporation, 288 U.S. 406, 53 S.Ct. 428, 430, 77 L.Ed. 861, the court used this language: "The Commissioner and Board of Tax Appeals have practical knowledge of the intricate d......
  • Smith v. Comm'r of Internal Revenue , Docket Nos. 5330-68
    • United States
    • United States Tax Court
    • May 12, 1971
    ...No. 52, 69th Cong., 1st Sess., p. 19 (1926); H. Rept. No. 356, 69th Cong., 1st Sess., pp. 32-33 (1926); Burnet v. S. & L. Bldg. Corp., 288 U.S. 406, 413-414; Nuckolls v. United States, 76 F.2d 357, 359 (C.A. 10); Everett Pozzi, 49 T.C. 119, 126; Lewis M. Ludlow, 36 T.C. 102, 107-108; Thomas......
  • Request a trial to view additional results
58 cases
  • Fort Howard Corp. & Subsidiaries v. Comm'r of Internal Revenue, No. 6362–92.
    • United States
    • United States Tax Court
    • August 24, 1994
    ...Corp. v. Commissioner, 19 B.T.A. 788, 795 (1930), revd. on other grounds 60 F.2d 719 (2d Cir.1932), revd. Burnet v. S & L Bldg. Corp., 288 U.S. 406 (1933); Lovejoy v. Commissioner, 18 B.T.A. 1179, 1182 (1930); Simmons Co. v. Commissioner, 8 B.T.A. 631 (1927), affd. 33 F.2d 75 (1st Cir.1929)......
  • Lychuk v. Comm'r of Internal Revenue, No. 11794–99
    • United States
    • United States Tax Court
    • May 31, 2001
    ...19 B.T.A. 788, 795–796 (1930), revd. on other grounds 60 F.2d 719 (2d Cir.1932), revd. sub nom. Burnet v. S. & L. Bldg. Corp., 288 U.S. 406, 53 S.Ct. 428, 77 L.Ed. 861 (1933); compare Anover Realty Corp. v. Commissioner, 33 T.C. 671, 675, 1960 WL 1065 (1960), wherein we stated: It is not th......
  • Kingan & Co. v. Smith, No. 1851.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
    • December 10, 1936
    ...necessary to carry into effect the provisions of the act. In the case of Burnet, Commissioner, v. S. & L. Building Corporation, 288 U.S. 406, 53 S.Ct. 428, 430, 77 L.Ed. 861, the court used this language: "The Commissioner and Board of Tax Appeals have practical knowledge of the intricate d......
  • Smith v. Comm'r of Internal Revenue , Docket Nos. 5330-68
    • United States
    • United States Tax Court
    • May 12, 1971
    ...No. 52, 69th Cong., 1st Sess., p. 19 (1926); H. Rept. No. 356, 69th Cong., 1st Sess., pp. 32-33 (1926); Burnet v. S. & L. Bldg. Corp., 288 U.S. 406, 413-414; Nuckolls v. United States, 76 F.2d 357, 359 (C.A. 10); Everett Pozzi, 49 T.C. 119, 126; Lewis M. Ludlow, 36 T.C. 102, 107-108; Thomas......
  • Request a trial to view additional results

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