Alexandria Gravel Co. v. Commissioner of Internal Revenue

HOLMES, Circuit Judge

(dissenting).

I think there was substantial evidence to support the finding of the Board of Tax Appeals that these commissions on sales of gravel were not ordinary and necessary expenses of the business within the meaning of Sections 23(a) of the Revenue Acts of 1928 and 1932, 26 U.S.C.A. § 23 and note. Moreover, the conclusion of the Board that payment of such commissions to a state officer was contrary to public policy and not an allowable deduction upon the income tax returns of petitioner was a rational one and should not be disturbed by this court. Oscanyon v. Arms Co., 103 U.S. 261, 26 L.Ed. 539. See, also, Easton Tractor & Equipment Co., 35 B.T.A. 189, and authorities cited’ therein.

With deference, I think the decision of the Board should be affirmed. There is no analogy between allowing this deduction and taxing the net income of an illegal enterprise. Whether crime shall be exempt from income tax is a matter of public policy for Congress to determine; but this petitioner was engaged in a legitimate business and is charged with no crime. It is said that the gravel was sold upon competitive bids. This fact would seem to support, rather than refute, the *617inference of the Board that payment of the commission in question was unnecessary and extraordinary.

This court may differ from the Board, but should not substitute its judgment for a fair and reasonable conclusion of fact which the Board has reached upon competent evidence. The effect of the opinion of the court is to say that, upon the evidence in this record, a reasonable man could not fairly conclude that the payment of these commissions was extraordinary and unnecessary. I cannot go that far with the majority.