concurring: I concur in the result reached by the majority but I would hold for petitioner for the reason that the portions of section 1.170-3 (b), Income Tax Regs., with which petitioner did not comply are invalid.
Section 170 (a) (2) of the Code permits a corporation, which reports its income on the accrual basis of accounting, to deduct charitable contributions accrued at the close of its taxable year if paid within 2½ months thereafter. The corporation is required to signify its election at the time of filing its return in such manner as the Secretary or his delegate shall by regulations prescribe. The applicable regulations require the corporation to attach to the return a copy of the resolution of the board of directors authorizing the contribution together with a written declaration verified by an officer of the corporation under the penalties of perjury that the resolution was adopted by the board of directors during the taxable year. Sec. 1.170-8, Income Tax Begs.
It is my view that the regulations are invalid to the extent that they require the corporation to attach a copy of the resolution of the board of directors and to attach a verified statement that the board adopted the resolution during the taxable year. The statute merely requires that the corporation “signify” the election on its return. The regulations virtually require the corporation to “substantiate” the deduction. In my view, this is not warranted. The income tax return is executed under the penalties of perjury so why is it so necessary to again, under the penalties of perjury, declare that one of the requirements of the statute has been satisfied: i.e., authorization for the contribution by the board of directors?
Such requirement clearly goes beyond the ordinary meaning of .the word “signify.”
If the Secretary or his delegate can require substantiation of deductions through the means of attachments to the tax returns upon the authority of the mere term “signify,” the requirements for claiming other deductions on tax returns may become burdensome.
The recognized limitation of an administrative regulation was described by the Supreme Court as follows in Manhattan General Equipment Co. v. Commissioner, 297 U.S. 129, 134 (1936):
The power of an administrative officer or board to administer a federal statute and to prescribe rules and regulations to that end is not tbe power to make laws— for no such power can be delegated by Congress — but tbe power to adopt regulations to carry into effect tbe will of Congress as expressed by tbe statute. A regulation wbieb does not do tbis, but operates to create a rule out of harmony with tbe statute, is a mere nullity. Lynch v. Tilden Produce Co., 265 U.S. 315, 320-322; Miller v. United States, 294 U.S. 435, 439-440, and cases cited. And n'ot only must a regulation, in order to be valid, be consistent with tbe statute, but it must be reasonable. International Ry. Co. v. Davidson, 257 U.S. 506, 514.
In a case of striking similarity we held portions of the regulations invalid with respect to the deduction involved here. Faucette Co., Inc., 17 T.C. 187 (1951): The regulations applicable in that case required the board of directors to authorize the charitable contribution •m writing. We held that the requirement that the authorization must be in writing was an invalid limitation on the deduction and inconsistent with the statute. The Commissioner acquiesced in that case. 1953-1 C.B. 4.
In my view, holding a portion of the regulations invalid herein goes no further than we went in Faucette, and I would, therefore, hold for petitioner on such grounds.
Wiles, /., agrees with this concurring opinion.