George K. Ford and Helen L. Ford v. Commissioner of Internal Revenue

This case was appealed to this Court by the taxpayers, after a determination in the Tax Court in favor of the Commissioner. 1 Because the deficiencies asserted by the Commissioner against Helen L. Ford and George K. Ford were identical, and the issue presented in each petition was identical, the cases were consolidated before the Tax Court.

Only the computations for the years 1943 and 1944 (prepared by the Commissioner) were in issue before the Tax Court and these only because they were challenged by the taxpayers. In its reported opinion, the Tax Court stated that “because of the forgiveness feature of the Current Tax Payment Act, the years 1942 and 1943 were considered together and the tax liability is shown for 1943 only.”

The case was submitted to the Tax Court upon the following stipulation of facts, 2 which was subsequently adopted by the Tax Court as its findings of fact:

Stipulation of Facts

“It is Mutually Stipulated and Agreed, by and between the parties hereto, through their respective attorneys of record, that the following statements are true; that this proceeding may stand submitted upon the filing of this stipulation, and that briefs shall be filed within the…

(dissenting).

I am inclined to think that in affirming the Commissioner’s assessment of deficiencies the Tax Court reached the right result although for a reason not responsive to the issue framed by the parties.

Taxpayers are husband and wife. In 1945 — the tax year in question — -they made separate returns, whereas in the years prior to 1945 (while the bunched income reported in 1945 was in process of being earned) they had made joint returns. In computing their 1945 taxes under the relief provisions of Section 107 (a) they adopted the more favorable method of making the necessary prior year computations as though separate returns had been filed for such years. The issue formulated before the Tax Court was whether or not, in reporting the Section 107 income in 1945, the taxpayers were bound to compute their taxes on the joint return basis adopted in the prior years.

It is of course true that in applying Section 107(a) prior tax years are not opened and the tax for such years is not revised. The computations to be made under the Section constitute only the measure of the, tax for the year in which long-term earnings are received. But the taxpayers, in applying their method of…

I concur in ail that is said in Judge Bone’s opinion. I suggest there is an additional ground upon which it may be said that the reason assigned by the Tax Court for its decision cannot justify it. That reason was that “we do not know what the separate individual deductions of George Ford were for .1943 and 1944.” This alleged want of showing on the taxpayers’ part was not a reason advanced by the Commissioner in his deficiency notice. And paragraph 7 of the stipulation, quoted by Judge Bone, shows that this was not made an issue before the Tax Court. It cannot, therefore, sustain the decision below. Harbor Plywood Corp. v. Commissioner, 9 Cir., 143 F.2d 780, 783 , citing Helver-ing v. Tex-Penn. Oil Co., 300 U.S. 481, 498 , 57 S.Ct. 569 , 81 L.Ed. 755 .

The cases holding that where a taxpayer has an election between two methods of making returns, his choice, once made, is binding, such as Pacific National Co. v. Welch, 304 U.S. 191 , 58 S.Ct. 857 , 82 L.Ed. 1282 ; Binder v. Welch, 9 Cir., 107 F.2d 812 ; and Rose v. Grant, 5 Cir., 39 F.2d 340, 341 , involve attempts to alter the amount of taxes owing for the very year in which the choice was made. The reason for holding the…

217 F.2d 886 George K. FORD and Helen L. Ford, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. No. 13569. United States Court of Appeals Ninth Circuit. December 10, 1954. Eli Freed, Emmett Gebauer, Freed, Gebauer & Freed, San Francisco, Cal., for appellants. H. Brian Holland, Atty. Gen., Ellis N. Slack, Helen Goodner, George F. Lynch, Melva M. Graney, Sp. Assts. to Atty. Gen., Charles W. Davis, Chief Counsel, Bureau of Internal Revenue, Washington, D. C., for appellee. Before HEALY, BONE and POPE, Circuit Judges. BONE, Circuit Judge. 1 This case was appealed to this Court by the taxpayers, after a determination in the Tax Court in favor of the Commissioner. 1 Because the deficiencies asserted by the Commissioner against Helen L. Ford and George K. Ford were identical, and the issue presented in each petition was identical, the cases were consolidated before the Tax Court. 2 Only the computations for the years 1943 and 1944 (prepared by the Commissioner) were in issue before the Tax Court and these only because they were challenged by the taxpayers. In its reported opinion, the Tax Court stated that "because of the forgiveness feature of the Current Tax Payment…