with reduction of tax'. The Court, however, made it doubly clear that the question was one of proper tax accounting, that is, of fact and not of law, saying 'we are not adopting any rule of tax benefits. * * * The error of the Court below' (that is, the Court of Appeals, which reversed the Tax Court) 'consisted of treating as a rule of law what we think is only a question of proper tax accounting'. The logic of the opinion is such that the Supreme Court would have sustained the Tax Court whichever way that Court had decided the question of the existence of taxable income.
Entirely apart from the Commissioner's ruling quoted above, I am of the opinion that in the present case, as a matter of fact, the 1952 credits constitute taxable income for that year and that they are not recoveries of overpayments of deposit insurance assessments nor specific reductions of any particular assessments.
The transactions wherein the 1951 assessment was calculated and paid and the 1952 assessment was calculated and paid in cash and by a credit received in that year were separate transactions even though the 1952 credit was calculated on the basis of the 1951 net assessment income of the Federal Deposit Insurance Corporation. If the credit has been the return of an overassessment erroneously made, its allowance might have been considered a 'recovery' of a part of an expenditure made in 1951 and the assessment and subsequently allowed credit could have been viewed as steps in a single transaction occurring, for tax accounting purposes, in 1951. However, the 1951 assessment was not erroneous, nor, although the credit resulted in economic gain to the taxpayer in 1952, could it be called a 'recovery' of money paid by it. There was no certainty that any credit would be received. The bank could not transfer it or realize upon it or avail itself of it in any way except for the single limited purpose of reducing the payments required of it in 1952, that is, the year following that in which the assessments were made and the premiums paid. The assessment in 1951 was, of course, paid partly in cash and partly by credit calculated on the basis of prior years.
Although, had there been any tax in 1951, the bank might have deducted the payment of its assessment for that year as a business expense, it cannot be said that it incurred a loss when it paid its 1951 assessment. It bought and paid for something of value to it in its business, namely, the status of an insured bank. The assessments are not tentative assessments nor, except upon an uncertain contingency, does the law require the return of any part of the premium. Only if the Federal Deposit Insurance Corporation operated in such a manner that its assessment income exceeded its expenses and losses was it obliged to credit 60% of this profit to member banks.
I cannot say that the plaintiff has established that the Commissioner was in error when he required the plaintiff (as well as mutual savings banks in general) to treat the credit as income for the year when it was actually granted. This accounting procedure seems to me to be perfectly proper. The same result would be reached if the credit, instead of being treated as income, were regarded as a reduction of the 1952 assessment and only the amount actually paid by the bank were considered a business expense. To treat the credit received as a reduction of the prior year's expenses seems to me to be contrary to the intent of Congress when it limited the application of the credit it granted to the reduction of the next year's assessment. Regardless of the bookkeeping techniques involved, this is what actually happens, because the bank actually parts with only the difference between the assessment and the credit allowed during any one year. The motion of the plaintiff is denied, and the motion of the defendant is granted. Judgment may be entered for the defendant and against the plaintiff.