Commissioner v. Valley Morris Plan

We have before us two separate petitions to review two decisions of the Tax Court of the United States. With one exception, an identical question was involved and while the cases were briefed separately, they were united for argument. We will endeavor to dispose of them in a single opinion.

The exception is the alternative issue raised in the Morris Plan Company of California case.

Jurisdiction is conferred by § 7482 of the Internal Revenue Code of 1854, 26 U.S.C.A. § 7482 .

The identical question presented in each of the cases as it appears in the briefs of the Commissioner of Internal Revenue is:

The Valley Morris Plan ease involves the same question:

The same question was referred to in the brief of the Morris Plan Company of California as follows:

So we have in each case as the first issue to be determined substantially the same question.

As noted by the petitioner, there is a difference of fact. In Valley Morris Plan Term Thrift Certificates are involved, while in the California Morris Plan case we are, in the main, concerned with Installment Thrift Certificates. From our review of the cited cases we feel that this difference is of no consequence.

As explanatory of…

Upon Petitions for Rehearing

The following statement appears in the court’s opinion at page 626:

The respondents, petitioners herein, point out in their petitions for rehearing that section 104 defines “banks” as being institutions which are, inter alia, “subject by law to supervision and examination by State * * * or Federal authority having supervision over banking institutions.” Since in California banks are “supervised” by the Superintendent of Banks and respondents are “supervised” by the California Corporations Commissioner, the petitioners claim that a vital element in the definition of banks under section 104 is missing and that consequently petitioners cannot be “banks”.

While strictly speaking the above mentioned element in the definition of “banks” would not appear to be present in this ease, we are, nevertheless, of the opinion that petitioners ax’e “banks” within the intent and meaning of section 104. The federal tax laws are to be administered uniformly. The petitioners in substance have all the attributes of banks for purposes of the taxes here involved and therefore they should be treated accordingly. The authorities which have been discussed establish that…