Neuberger v. Commissioner, 
311 U.S. 83 (1940)

  

Case

U.S. Supreme Court

Neuberger v. Commissioner, 311 U.S. 83 (1940)

Neuberger v. Commissioner of Internal Revenue

No. 5

Argued October 16, 17, 1940

Decided November 12, 1940

311 U.S. 83

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

1. Under § 23(r)(1) of the Revenue Act of 1932, a taxpayer's distributive share of partnership profits derived from sales or exchanges of stocks and bonds that were not capital assets (as defined in § 101), is a "gain" to the extent of which he is entitled to a deduction of a loss sustained by him in similar transactions for his individual account. P. 311 U. S. 88.

2. That §§ 184-188 of the Revenue Act of 1932 advert to instances in which partnership income retains its identity in the individual partner's return does not, by application of the maxim expressio unius est exclusio alterius, require disallowance of the deduction here claimed. The maxim is not a rule of law, but an aid to construction, and may not override the clear intent of Congress. P. 311 U. S. 88.

3. Where the intent of Congress is plain, the scope of an Act may not be narrowed by administrative interpretation. P. 311 U. S. 89.

4. Cases variously emphasizing the character of partnerships as business units, or as associations of individuals, but not involving § 23(r)(1), are of little aid in ascertaining its meaning. P. 311 U. S. 89.

5. The findings of the Board of Tax Appeals in this case show that the allowance of a deduction of the amount claimed would not exceed the limit prescribed by § 23(r)(1). P. 311 U. S. 89.

6. The construction here given § 23(r)(1) is consistent with the legislative history of amendatory legislation, as well as that of the section itself. P. 311 U. S. 89.

7. Shearer v. Burnet, 285 U. S. 228, distinguished. P. 311 U. S. 90.

104 F.2d 649 reversed.

Page 311 U. S. 84

Certiorari, 310 U.S. 655, to review the affirmance of a decision of the Board of Tax Appeals, 37 B.T.A. 223, sustaining the determination of a deficiency in income tax.

MR. JUSTICE MURPHY delivered the opinion of the Court.

Petitioner, a resident of New York, was a member of the New York Stock Exchange. He was engaged in the business of trading in securities on the floor of the Exchange for the partnership of Hilson & Neuberger, of which he was a member, executing orders on behalf of customers of the partnership. In addition, he made numerous purchases and sales of securities for his own account.

During the year 1932, the one here in question, Hilson & Neuberger derived a profit of $142,802.29 from the sale of securities which were not capital assets as defined in Section 101 of the Revenue Act of 1932, 47 Stat. 169, 191. The firm had other income of $170,830.65 and deductions of $203,981.78, or net income of $109,651.16. Petitioner's distributive share was $44,158.55. During the same year, petitioner sustained a net loss of $25,588.93 on his private transactions in stocks and bonds which were not capital assets as defined in Section 101.

In his income tax return for the year 1932, petitioner deducted from gross income the loss of $25,588.93. The Commissioner disallowed the deduction and assessed a deficiency. The Board of Tax Appeals upheld the action of the Commissioner. 37 B.T.A. 223. On appeal, the