Steve Bruhn, CPA

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Quotes From the Courts

Taxpayers generally are fond of quoting Judge Learned Hand’s statement that “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” It is sometimes forgotten, however, that it was in that very case that Judge Hand’s opinion for this court held that a series of transactions which suited the verbal definition of corporate reorganization in the Revenue Act of 1928 nevertheless did not meet the statutory requirements because the transactions lacked a business purpose and the words of the Act made it evident that the aim of Congress was to approve only reorganizations having such a purpose.  As Judge Hand said with reference to the tax statute there involved, “the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes, and no degree of particularity can ever obviate recourse to the setting in which all appear, and which all collectively create.”
Garlock v. Commissioner, 489 F.2d 197 (2d Cir. 1973)
 
Unlike some other kinds of legislation, tax laws are not enacted for the ages, but for the special exigencies of a particular time and discrete circumstances. Change in the tax laws is a way of life. 
Feldman v. Commissioner, 791 F.2d 781 (9th Cir. 1986)
 
"The words of such an act as the Income Tax, for example, merely dance before my eyes in a meaningless procession: cross-reference to cross-reference, exception upon exception-couched in abstract terms that offer no handle to seize hold of-leave in my mind only a confused sense of some vitally important, but successfully concealed, purport, which it is my duty to extract, but which is within my power, if at all, only after the most inordinate expenditure of time. I know that these monsters are the result of fabulous industry and ingenuity, plugging up this hole and casting out that net, against all possible evasion; yet at times I cannot help recalling a saying of William James about certain passages of Hegel: that they were no doubt written with a passion of rationality; but that one cannot help wondering whether to the reader they have any significance save that the words are strung together with syntactical correctness. Much of the law is now as difficult to fathom, and more and more of it is likely to be so; for there is little doubt that we are entering a period of increasingly detailed regulation, and it will be the duty of judges to thread the path-for path there is-through these fantastic labyrinths."
Learned Hand, Eulogy of Thomas Walter Swan, 57 Yale L. J. 167, 169 (1947), quoted in Welder v. United States, 329 F. Supp. at 741-42 (S. D. Tex. 1971)
 
"[W]hat makes sense" does not necessarily dictate the definitive answer in the tax area; apparent conceptual niceties often must give way to the hard realities of statutory requirements.
United States Freight Co. v. U.S., 422 F.2d 887 (U.S. ct. of Cl. 1970)
 
[The Commissioner's] ruling has the support of a presumption of correctness, and the [taxpayer] has the burden of proving it to be wrong.
Welch v. Helvering, 290 U.S. 111 (1935)
 
Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.   Judge Learned Hand
Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) - dissenting opinion