Lucky Lager Brewing Company v. Commissioner of Internal Revenue

This is a petition by the Lucky Lager Brewing Company, hereafter petitioner, to review a decision of the Tax Court assessing a deficiency against it in the amount of $102,343.94 in excess profits tax for the calendar year 1950.

To meet the expenses of the Korean war Congress imposed an excess profits tax on corporate income with a special provision favoring corporations showing an exceedingly large growth during the period immediately before the war. The Tax Court held that petitioner’s income history did not bring it within the favored class of growth corporations, and petitioner here seeks review of that decision.

Under Section 435 of the Internal Revenue Code of 1939, enacted in 1951, 26 U.S.C.A. Excess Profits Taxes, § 435, the excess profits tax imposed by Section 430 of the Code, 26 U.S.C.A. Excess Profits Taxes, § 430, applies only to the portion of the 1950 income of a corporation which exceeds its income during a base period of the statute. Two alternative methods are provided for determining the amount of corporate income during the base period which is to be deducted from (or taken as a “credit” against) the 1950 income of the corporation, thereby reducing the amount…

(concurring) .

I think we must hold here as Judge Denman holds. I have been troubled by *624 what we might have done if our case were that during the critical period examined the beer taxes had been raised, the beer taxes successfully passed on to the consumer, and thereby it should be contended the taxpayer’s base of growth would have enabled it, solely by means of the added tax, to qualify for the growth exemptions from excess profits taxes. What would we do? I now think we would have to let the taxpayer out of his excess profits taxes. In a market where the government tells a producer that out of every two dollars you sell your beer for, one dollar is for me and one is for you, we get an unfair result for Lucky Lager and we would get an unfair result in the ease I suggest.

Also, I am impressed with the gross inequity we have between Lucky Lager and some competitor who may have attained the necessary growth by the accident that his beer was sold mostly in export. The latter’s beer goes out free from the tax. In a practical concept, here Lucky Lager collected the tax from American beer drinkers for the government. But my practical concept :1s not the legal concept.

I…

246 F.2d 621 57-2 USTC P 9829 LUCKY LAGER BREWING COMPANY, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. No. 15334. United States Court of Appeals Ninth Circuit. June 24, 1957. Rehearing Denied July 29, 1957. Valentine Brookes, Arthur H. Kent, Russel Shearer, San Francisco, Cal., for petitioner. Charles K. Rice, Asst. Atty. Gen., Grant W. Wiprud, Hilbert P. Zarky, Melva M. Graney, Attorneys, Department of Justice, Washington, D.C., for respondent. Before DENMAN, Chief Judge, and CHAMBERS and BARNES, Circuit Judges. DENMAN, Chief Judge. 1 This is a petition by the Lucky Lager Brewing Company, hereafter petitioner, to review a decision of the Tax Court assessing a deficiency against it in the amount of $102,343.94 in excess profits tax for the calendar year 1950. 2 To meet the expenses of the Korean war Congress imposed an excess profits tax on corporate income with a special provision favoring corporations showing an exceedingly large growth during the period immediately before the war. The Tax Court held that petitioner's income history did not bring it within the favored class of growth corporations, and petitioner here seeks review of that decision. 3 Under…