The opinion
TURNER, J., dissenting: It is my opinion that the petitioner, by the plain language of section 117 (j), is barred from the relief here sought. As shown by the findings of fact, the petitioner engaged in the operation of a cattle ranch of approximately 50,000 acres in western Nebraska, and while the facts, as found, do not show the size, or approximate size, of the petitioner’s cattle herd, it may be assumed from the size of the ranch itself that the petitioner’s cattle ran into numbers so substantial as to make it difficult or impossible to maintain its accounts with respect to the individual animals, as appears to have been done in Albright v. United States, 173 Fed. (2d) 339. 1 At any rate, the facts show that the petitioner has regularly and consistently kept its accounts and reported its income by the inventory method and that its breeding herd has consistently been included in that inventory.
The problems of farm and ranch accounting have always been very difficult in that the operations seldom ever lend themselves to the exactness of the accounting methods established and maintained in commercial and industrial enterprises. To the rancher, the breeding herd is obviously quite comparable to the plant of the industrial concern, and, if such operations were readily susceptible of the methods of accounting applied in industrial concerns, there would appear to be no occasion for using the inventory method of accounting and of reporting income in so far as it relates to the breeding herd.
The Commissioner has been given wide latitude by Congress in determining whether a taxpayer’s method of accounting will clearly reflect income and, by section 22 (c) of the Internal Revenue Code, he has been given specific authority to require the use of inventories where necessary clearly to determine the income of the taxpayer, and where so found to be necessary, they are to be taken on the basis which the Commissioner prescribes as conforming as nearly as may be to the best accounting practice in “the trade or business.” The Commissioner’s staff and members of the accounting profession occupied with farm and ranch accounting have, over the years, undertaken to devise better methods for farm and ranch accounting, but they have regularly come back to the conclusion that in large operations, such as we have here, some form of inventory accounting is the best available solution, even though the form used be the rather unorthodox farm market method.
When Congress, in enacting section 117 (j), supra, involved herein, decided to grant an advantage to taxpayers sustaining losses from the sale of property “used in the trade or business,” it did so, with certain limitations and restrictions. In defining property used “in the trade or business,” it specifically excluded “property of a kind which would properly be includible in the inventory of the taxpayer if on hand at the close of the taxable year.” Some suggestion has been offered that that exclusion from the definition of property used in a trade or business, for the purposes of section 117 (j), does not apply to a breeding herd, because, in logic, a breeding herd being comparable to the plant of an industrial concern, is not property of a kind which would “properly be includible in the inventory of the taxpayer.” The simple answer, in my opinion, is that the breeding herd of a rancher is not the plant of an industrial concern and that the regularly accepted method of dealing with a breeding herd in the accounts of ranching operations and the reporting of income therefrom has been by the inventory method. In that situation, I am unable to conclude that Congress did not legislate with regard to existing and established methods of accounting in the various forms of enterprise and that it did not intend to exclude, as property “used in the trade or business,” the breeding herd of a ranching operation.
In the circumstances, it does not seem to me that we may say that the petitioner’s breeding herd was not properly includible in its inventory. It is accordingly my view that by the interpretation here placed on the definition of property “used in the trade or business,” for the purposes of applying section 117 (j), supra, we are revising and amending an act of Congress. For that reason, I note my dissent.
Disney, J., agrees with this dissent. In the Albright case, there is some slight suggestion that the court might have found some difference between the case of a dairy farmer and one engaged in raising and selling beef cattle.