dissenting: I dissent from the conclusion reached by the majority.
Section 23 (e) of the Revenue Act of 1934 provides:
In computing net income there shall be allowed as deductions:
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(e) Losses by Individuals. — In the case of an individual, losses sustained during the taxable year * * *
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(2) if incurred in any transaction entered into for profit * * *.
Section 117 (a) provides that “in the case of a taxpayer, other than a corporation” only certain percentages of capital losses “shall be taken into account in computing net income”, and section 117 (d) provides that “Losses from the sales or exchanges of capital assets shall be allowed only to the extent of $2,000 plus the gains from such sales or exchanges.”
Section 51 (a) provides that “every individual having a net income for the taxable year of $2,500 or over, if married and living with husband or wife” shall make a return stating the items of gross income “and the deductions and credits allowed under this title”; while section 51 (b) provides that if a husband and wife have a certain “aggregate net income” or a certain “aggregate gross income” “ (1) each shall make such a return, or (2) the income of each shall be included in a *1150single joint return, in which case the tax shall he computed on the aggregate income.” [Italics supplied.]
Section 801 (a) (1) provides that “the term ‘person’ means an individual, a trust or estate, a partnership, or a corporation”, while 801 (a) (14) provides “The term ‘taxpayer’ means any person subject to a tax imposed by this Act.”
Section 51 (b) of the Revenue Act of 1938, which was held in Moore v. United States, 37 Fed. Supp. 136, to clarify the similar provision in the 1934 Act, provides that the liability with respect to the tax of husband and wife filing a joint return is joint and several.
Working from these statutory provisions in a consideration of the problem presented by this proceeding, I would reach the following conclusions:
(1) The husband and wife filing a joint return are persons who are jointly and severally subject to a tax, and therefore, each is a taxpayer within the meaning of the act.
(2) This tax is to be computed on the aggregate net income shown on the joint return, which will be considered for tax purposes as the joint and several income of the two spouses.
(3) The aggregate net income of husband and wife is to be computed by adding together the separate items of gross income of each, then adding together the separate items of deductions to which each is entitled and subtracting the aggregate of such deductions from the aggregate of such gross income.
(4) Each spouse is entitled to loss deductions pursuant to section 23 te).
(5) The limitation of section 117 (d) applies to the loss deductions of each spouse, since each is a taxpayer within the definition of the statute even though one with a joint and several tax liability calculated upon joint as well as several income.
(6) In return for the advantages to be gained by filing a joint return, e. g., the deduction by one spouse of capital losses from the joint aggregate income even though such income was made up solely by the income of the other spouse, the disadvantages resulting are the computations of taxes and surtaxes upon the aggregate net income, and the joint and several liability upon each spouse for the payment of such tax, and not the elimination of any deduction to which either might be otherwise entitled.
However, the majority opinion, reasoning from certain language used by the Supreme Court in the cases of Helvering v. Janney, 311 U. S. 189, and Taft v. Helvering, 311 U. S. 195, has reached the conclusion that where husband and wife file a joint return a union results even more complete than the union created by the marriage ceremony in that “there are no longer two individuals, with their own rights to deductions, but an impersonalized return of income. *1151losses, deductions, etc., which, though originating in the affairs of two people, are no longer so viewed, because all are merged and integrated into a whole”, and that capital losses “are by virtue of such return no longer those of either party, but of one entity, the returner of income * * *” and thus are limited by section 117 (d) to $2,000 plus capital gains.
I can find no justification in the statute for this view and nothing in the Janney case or Taft case which compels this conclusion.
While both of those cases had to do with tax problems arising from the use by husband and wife of a joint return authorized by section 51 (b) of the Revenue Act of 1936,1 they did not have to do with the particular tax problem here involved, which, as we have already indicated, is whether a husband and a wife, who have each suffered capital losses and who file a joint return, are each permitted to take a capital loss deduction as limited by section 117 (d), (limited to $2,000 for each), or are permitted to take one deduction limited to $2,000 for both.
In Helvering v. Janney, supra, the decision of the Supreme Court gave effect to a deduction of the husband on account of capital losses by offsetting it against capital gains of the wife. In that case the husband had no capital gains and if each of the spouses had filed a separate return the husband would have been entitled to a loss deduction of only $2,000 and the wife to none.
Article 51 (1), Regulations 94, provides in part:
If the income of each [spouse] is included in a single joint return, the tax is computed on the aggregate income and all deductions and credits to which either is entitled shall he taken from such aggregate income. [Emphasis supplied.]
The Supreme Court, in Helvering v. Janney, supra, quoted a similar regulation (Regulations 62, article 401). Later, in its opinion, it said:
The Revenue Act of 1934 continued the prior statutory provisions as to joint returns of husband and wife, and Section 117 (d) of that Act, as to capital losses, did not purport to alter the rule as to the right of the spouses to deductions in their joint return. Section 117 (d) merely limited the amount of losses which could be deducted * * *. [Italics supplied.]
It will be noted that the Court uses the words “spouses” and “deductions” in the plural.
In Taft v. Helvering, supra, the taxpayers, who, as husband and wife, had filed a joint return, took deductions of their combined charitable contributions. Respondent ruled that the deductions of each *1152spouse properly allowable therefor were limited to 15 percent of his or her income. The Court held that the percentage should be calculated on the aggregate income shown by the joint return. The Court said, inter alia, “The principle of a joint return permitted aggregation of income and deductions and thus overrode the limitations incident to separate returns.” The “aggregation * * * of deductions” referred to by the Court does not mean the elimination of any deduction.
In the Janney case the Court held that in cases where joint returns were filed effect should be given to the right to deductions of each spouse even where it was necessary to refer to the aggregate income subject to tax in order to find a type of income from which the deduction could be taken. In the Taft case it was held that both spouses, in the case of a joint return, were entitled to “combined deductions” on account of charitable contributions which each had made, but that reference should be made to the aggregate income in determining the percentage limiting such “combined deductions.” The rule to be taken from a careful reading of these cases is that, in ascertaining the aggregate income subject to tax reported by a joint return, the proper deductions of each spouse may be combined and taken from their combined gross income, but that in order to give effect to such deductions, as in Janney's case, or to calculate the amount of the deductions in terms of percentage of income, as in Taft's case, reference is to be made to the aggregate income shown in the joint return.
SEC. 51. INDIVIDUAL RETURNS.
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(b) Husband and Wipe. — If a husband and wife living together have an aggregate net income for the taxable year of $2,500 or over, or an aggregate gross income for such year of $5,000 or over—
(1) Each shall make such a return, or
(2) The income of each shall be included in a single Joint return, in which ease the tax shall be computed on the aggregate income.