Helvering v. Independent Life Ins. Co.
case brief
ANALYSIS:
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292 U.S. 371,54 S. Ct. 758, 78 L. Ed.
1311, 1934 U.S.715
CASE SYNOPSIS: Petitioner commissioner
sought a writ of certiorari to review a decision of the Circuit Court
of Appeals for the Sixth Circuit wherein the court affirmed a
decision of the Board of Tax Appeals that petitioner commissioner's
deficiency assessments of income taxes against respondent life
insurance company constituted a direct tax and were therefore
invalid.
FACTS: Respondent life insurance company owned a building of which it occupied part and rented part. Its tax returns for each of two years included in gross income the rents received for the space let and deducted the taxes, expenses, and depreciation chargeable to the whole building. Pursuant to § 245(b) of the 1921 Revenue Act, petitioner commissioner added to the rents received from lessees in each year a sum sufficient to make the net for each tax year equal to four percent of the book value of the real estate as required under said section. Accordingly, petitioner assessed tax deficiencies against respondent for the subject years. The tax appeals board held that the assessed deficiencies were direct taxes and therefore invalid. The court of appeals affirmed, and petitioner sought a writ of certiorari.
HOLDING:
The court reversed, explaining that § 245(b) did not lay a tax on respondent's building or the rental value of the space it occupied.
FACTS: Respondent life insurance company owned a building of which it occupied part and rented part. Its tax returns for each of two years included in gross income the rents received for the space let and deducted the taxes, expenses, and depreciation chargeable to the whole building. Pursuant to § 245(b) of the 1921 Revenue Act, petitioner commissioner added to the rents received from lessees in each year a sum sufficient to make the net for each tax year equal to four percent of the book value of the real estate as required under said section. Accordingly, petitioner assessed tax deficiencies against respondent for the subject years. The tax appeals board held that the assessed deficiencies were direct taxes and therefore invalid. The court of appeals affirmed, and petitioner sought a writ of certiorari.
HOLDING:
The court reversed, explaining that § 245(b) did not lay a tax on respondent's building or the rental value of the space it occupied.
ANALYSIS:
Rather, the statute was in substance a
diminution or apportionment of expenses to be deducted from gross
income under the circumstances specified thereunder and Congress was
clearly authorized to so condition deductions from gross
income.
CONCLUSION: Court reversed lower court's determination that assessments of income taxes against respondent life insurance company constituted a direct tax and were therefore invalid. Court explained that § 245(b) did not lay a tax on respondent's building or the rental value of the space it occupied, but was in substance a diminution or apportionment of expenses to be deducted from gross income under the circumstances specified thereunder.
CONCLUSION: Court reversed lower court's determination that assessments of income taxes against respondent life insurance company constituted a direct tax and were therefore invalid. Court explained that § 245(b) did not lay a tax on respondent's building or the rental value of the space it occupied, but was in substance a diminution or apportionment of expenses to be deducted from gross income under the circumstances specified thereunder.
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