dissenting: I fully agree with Judge Simpson’s dissenting opinion. But I have other thoughts and comments.
This case is a prime example of why simplification and reform of our Federal income tax laws are needed.1 It is also a prime example of unfairness and creates further horizontal and vertical inequities.
If my analysis of the majority opinion is correct, I think the implications of the opinion are startling and wrong. If, as the majority concludes, the scope of section 108 of the Tax Reform Act of 1984 was intended to grant amnesty to all pre-ERTA commodity straddles, then perhaps Mr. Bumble was right.2 However, I firmly believe that Congress did not intend for section 108 to encompass all pre-ERTA commodity straddles. I am unwilling to attribute such an intent to the conferees of the tax-writing committees and to the members of Congress. The conclusion of the majority here represents a sharp departure from the principle of judicial restraint by relying on murky and gratuitous legislative history which flies in the face of the plain language of the statute. I think we should stay our hand and apply section 108 only to its intended recipients — commodity dealers. By expanding that section beyond its reasonable scope, the majority is basically rewriting the statute. I would refrain from such judicial legislation in the absence of unequivocal evidence of legislative purpose to the contrary. The majority’s strained construction of section 108 will impede the countdown for abusive tax shelters. The result, as I see it, is tax shelter relief run riot.
It is inconceivable to me that, in the Tax Reform Act of 1984, Congress would provide the Internal Revenue Service with new and strong enforcement tools to crack down on abusive tax shelters,3 and in the same law provide expansive tax relief for all investors in pre-ERTA commodity straddles. Congress also indicated that it expects the Tax Court to impose "without hesitancy in appropriate circumstances the penalties that Congress has provided.” See Staff of Joint Comm. on Taxation, General Explanation of Revenue Provisions of the Deficit Reduction Act of 1984, at 485 (Comm. Print 1984). In view of its positive legislative actions to curb the use of abusive tax shelters, I do not believe Congress intended to permit taxpayers, like the petitioner, to reap tax bonanzas with flaky deals that are tax motivated rather than economically motivated.
I dissent because, in my judgment, the majority has chosen a wrong and tortuous path.
Chabot, Parker, Shields, Swift, and Wright, JJ, agree with this dissent.In his radio address on Apr. 13, 1985, the President said the Federal tax system is "a complicated, frustrating, unfair mystery of legalistic gobbledygook and loopholes never designed, it seems, to help everyday wage earners, only those who can afford high-priced attorneys and accountants.” To that I would add: Simplification and reform of the Federal tax system are long overdue.
"If the law supposes that,” said Mr. Bumble * * * ''the law is a ass, a idiot.” C. Dickens, Oliver Twist, ch. 51.
See, for example, the following compliance provisions of the Tax Reform Act of 1984 with respect to tax shelters: (1) Sec. 141 relating to the registration of tax shelters; (2) sec. 142 requiring promoter lists; (3) sec. 143 increasing the penalty for promoting abusive tax shelters and providing for injunctions against aiding and abetting the understatement of tax liability; and (4) sec. 144 increasing the rate of interest for tax-motivated transactions. It is significant that a "tax motivated transaction” includes "any straddle.” The majority opinion in this case acknowledges that "petitioner’s gold trades here in issue were primarily tax motivated.”