Weiss v. Wiener Routzahn v. Same, s. 482

• Decision Date: 22 April 1929
• Docket Number: Nos. 482,483,s. 482
• Citation: 73 L.Ed. 720,49 S.Ct. 337,279 U.S. 333
• Parties: WEISS, Collector of Internal Revenue, v. WIENER. ROUTZAHN, Collector of Internal Revenue, v. SAME
• Court: U.S. Supreme Court

279 U.S. 333

49 S.Ct. 337

73 L.Ed. 720

WEISS, Collector of Internal Revenue,

v WIENER.

ROUTZAHN, Collector of Internal Revenue,

v. SAME.

Nos. 482, 483.

Argued April 12, 1929.

Decided April 22, 1929.

Mr. T. H. Lewis, Jr., of Washington, D. C., for petitioners.

Messrs. Edwin W. Brouse, of Akron, Ohio, and James S. Y. Ivins, of Washington, D. C., for respondent.

Mr. Justice HOLMES delivered the opinion of the Court.

These are suits brought by Wiener, the respondent, to recover amounts that he says should have been allowed as deductions from his income taxes but that were disallowed. The petitioners, the defendants, prevailed in the District Court, Wiener v. Weiss, 17 F.(2d) 650; but the judgment was reversed by the Circuit Court of Appeals, 27 F.(2d) 200, and a writ of certiorari was granted by this Court.

Wiener was in the business of taking long leases of property and subletting. He held 13 leases for 99 years, renewable forever. He claimed that the right to make an annual deduction from his income tax for estimated depreciation of the buildings, relying upon section 214(a)(8) of the taxing act, Revenue Act of 1918, c. 18, 40 Stat. 1057, 1066, 1067, which granted deduction of 'a reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence.' He was allowed all sums paid for repairs but nothing for the estimated obsolescence for which he had not paid. It may be taken for the purposes of decision that Wiener undertook to keep the buildings up to their present condition, to pay rent even if the buildings were destroyed and that his obligations were sanctioned by a liability to forfeiture. It is argued with much elaboration that not only covenants but economic necessity required the respondent to keep the buildings up to the mark and that the amount needed for this purpose should be allowed.

The income tax laws do not profess to embody perfect economic theory. They ignore some things that either a theorist or a business man would take into account in determining the pecuniary condition of the taxpayer. They do not charge for appreciation of property or allow a loss from a fall in market value unless realized in money by a sale. United States v. S. S. White Dental Co., 274 U. S. 398, 401, 47 S. Ct. 598 (71 L. Ed. 1120). A stockholder does not pay for accumulated profits of his corporation unless he receives a dividend. That is the general principle upon which these laws go. It is true that they allow for obsolescence of buildings, etc., where the loss is of materials not of money, but there as elsewhere the loss must be actual and present, not merely contemplated as more or less sure to occur in the future. If the taxpayer owns the property the loss actually has taken place. But with Wiener it had not, and it might never fall on him, as was pointed out by the District Judge. Some of the leases were assigned and others...