the existing regulation but was adding his own acquiescence and approval to the interpretation which the majority of the courts had given to it.
On May 10, 1934, the Revenue Law of 1934 was approved. The bill which formed its basis had passed the House on February 21. The Senate made some changes and passed the bill on March 28. The final bill was agreed to by both Houses on May 3.It re-enacted without change Sec. 22(a) of the Act of 1932, 26 U.S.C.A. Int.Rev.Acts, page 487.
If the decisions of the Circuit Court of Appeals in Commissioner v. S.A. Woods Mach. Co., supra, and the other cases which agreed with it are good law and established the proper construction of Sec. 22(a), then it seems to me that the entire question whether the amended regulation of May 2, 1934, or the earlier regulation is applicable is academic, because the new regulation would then have made no change whatever in the law.
Under this view its promulgation was merely a recognition by the Commissioner that the old regulation was ambiguous, and an effort to make its scope plain so as to avoid confusion in the future. If, however, the Circuit Court of Appeals decisions in line with the Woods case were not effective to establish a definite interpretation of the statute and if the construction which the Commissioner abandoned when he amended the regulation on May 2, 1934, was the law up to the change, then I may say that I agree fully with the dissenting opinion of the Board of Tax Appeals in National Home Owners Service Corporation v. Commissioner, 39 B.T.A. 753, to the effect that it is not to be presumed that at the time the bill was drafted and considered by Congress and enacted into the law both Houses of Congress through their committees were not fully aware of the impending regulation which became Treasury Decision No. 4430, and of its actual promulgation prior to the enactment of the Revenue Act of 1934. This being so, we have a recognition of the new rule by the re-enactment of the statute after the formulation of the rule by way of an amended regulation.
Morrissey v. Commissioner, 296 U.S. 344, 56 S. Ct. 289, 80 L. Ed. 263, settled it beyond question that the Commissioner has authority to amend an interpretive regulation to follow a court decision interpreting an earlier statute, and Helvering v. Wilshire Oil Co., 308 U.S. 90, 60 S. Ct. 18, 84 L. Ed. 101, decides that amended regulations may be effective, prospectively, from the date of their adoption without either express statutory adoption or implied Congressional approval from the re-enactment of the section to which they relate. This last decision, it would seem, answers in the negative the suggestion of Judge Hand in Squibb & Sons v. Helvering, 2 Cir., 98 F.2d 69, that the uniform interpretation placed upon 22(a) by the regulation and confirmed by the inaction of Congress was imbedded in the statute so deeply that only legislation could dislodge it.
An order may be presented entering judgment for the defendant.
Findings of Fact
The Court finds the facts as contained in the stipulation filed by the parties. In addition thereto, the Court affirms and adopts all requests for findings of fact by both parties. The plaintiff's second request is affirmed with the added finding that the plaintiff was chartered for the purpose, inter alia, of purchasing and holding shares of its own capital stock, that the shares in question in this case constituted an investment of the company, and that the company derived a gain from their sale.
The finding of fact as to the real nature of the transaction contained in the foregoing opinion may be taken as an additional special finding.
Conclusions of Law
The Court affirms all requests of the defendant for conclusion of law.
Plaintiff's requests for conclusions of law Nos. 3, 4, 5, 6 and 7 are denied. Requests Nos. 1 and 2 are affirmed only to the the extent that the regulations in force are correctly stated.But, as has been held, these regulations taken together with the statutes had received interpretation by the Courts and under such interpretation did not mean that a corporation never sustained profit or suffered a loss on purchase or sale of shares of its own stock. As so modified these two requests are affirmed.