The opinion
Hill, J., dissenting: I dissent from the holding in the foregoing opinion which approves a deduction for the payment by petitioner of expenses for medical care of a former secretary of the partnership involved in this proceeding. The deduction is claimed as a business expense.
It is not claimed that the partnership had any plan, policy, or obligation to make payments to its retired or former employees or any employee in the nature of a pension, retirement pay, or additional compensation for past services. Nor is it claimed that petitioner was authorized to act or did act for the partnership in making the payment in question for or on behalf of the former secretary of the partnership. It is apparent that even if such payment had been made under the authority or legal obligation of the partnership only one-third of such obligation to make such payment would have devolved upon petitioner.
The facts upon which the claim for such deduction are premised demonstrate unmistakenly, it appears to me, that the payment for which the deduction is claimed was a purely personal expense. It was a mere charitable contribution and as such it is, of course, not deductible.
The revenue law does not contemplate that the Federal Treasury shall forego tax revenue in order to share the effectuation of a generous impulse of a taxpayer in making charitable contributions to individual persons. Brushing over such acts with a thin veneer of claimed “business expense” should not be permitted to thwart the revenue law in this respect.
The Flood, case and other cases cited to support the holding in question are not authority for such holding. In the Flood case there was an authorization made and an obligation assumed by the partnership to make post-service payments to the employees as compensation for former services to the partnership in addition to the regularly stipulated and paid compensation for such services. Upon the dissolution of the partnership the partners individually assumed proportionately the obligation to pay such additional compensation in accordance with their several interests in the partnership. It was on this fundamental factual premise, totally lacking in the instant case, that the partner in the Flood case was allowed to deduct as a business expense the proportionate payment of such authorized and assumed obligation of the partnership. Petitioner concedes in the instant case that he had no legal obligation to make the payment for which he claims the deduction here in question.-
To me it seems obvious that ydiether or not the holding in the Flood case is sound on the basis of its facts it is too far a cry from the factual situation there to that of the instant case for the voice of authority to carry.
The Burrows and Kaufman cases cited in the majority opinion in this connection differ so widely from the case here in their factual structure as to eliminate even a remote parallelism with it.
I can see no reasonable alternative to the conclusion that the expenditure here sought to be deducted is a personal expense for which no deduction lies.
The holding here in question, aside from the unwarranted loss of tax which it entails in the instant case, is fraught with the potentiality of a spreading hazard to the revenue, presently and in the future.
The Federal Treasury has no surplus waters in its stream of revenue. It needs no spillways. If the holding here in question is adhered to it will open an eroding outlet through the revenue dike which is not only not authorized but is specifically prohibited by section 24 (a) (1) of the Internal Eevenue Code. Accordingly I dissent.
BRUCE, J., agrees with this dissent.