The opinion
Dawson, J., dissenting: I respectfully dissent for the reasons stated in my dissenting opinion in James E. Anderson, 56 T.C. at 1377-1379. I would follow the reversal of the Anderson case by the Court of Appeals for the Seventh Circuit, 480 F. 2d 1304 (C.A. 7, 1973). See also Mitchell v. Commissioner, 428 F. 2d 259 (C.A. 6, 1970), reversing 52 T.C. 170 (1969).
FeathbRSton, Quealy, Goeee, and Hall, JJ., agree with this dissent. Drennen, J., dissenting: I did not participate in this Court’s consideration of, and decision in, James E. Anderson, 56 T.C. 1370 , and hence feel less compunction about taking a position contrary to the position we took in William L. Mitchell, 52 T.C. 170 , than some of my colleagues. I am inclined to agree with Judge Dawson in his dissenting opinion in Anderson that the Supreme Court in United States v. Shelly Oil Co., 394 U.S. 678 , meant that the Code should not be interpreted to permit the equivalent of a double deduction absent a clear declaration by Congress of such intent. I recognize that artful, technical arguments can be made that the Court had different circumstances and different deductions before it in Shelly Oil than we have here and, therefore, that case is not controlling here. But I believe that is more wishful thinking than practical analysis of the Court’s opinion and that Shelly Oil should be considered controlling here. Such is the view taken by two Courts of Appeals in reversing this Court in Mitchell v. Commissioner, 428 F. 2d 256 (C.A. 6, 1970), and Anderson v. Commissioner, 480 F. 2d 1804 (C.A. 7, 1973).
While I realize that the proposal I am making is not before the Court in this case, and may never be urged by either a taxpayer or the Commissioner, because a tax benefit in the hand is worth two possible ones in the future, I am still of the view, suggested in my concurring opinion in Mitchell, that perhaps the best way to resolve the conflicting legal arguments and equities under circumstances such as here present would be to add the amount repaid because of the threat of section 16(b) of the Securities Exchange Act of 1934 to the basis of the stock purchased and presently held by the taxpayer. Surely the purchase in both the purchase-sale and the sale-purchase transactions is basically responsible for triggering the repayment because of the possible violation of section 16(b) and thus the repayment is tantamount to an additional cost of the purchased stock. This would deny the purported “insider” recognition of his repayment loss until he disposes of the stock, the purchase of which triggered the payment, and the gain or loss on such ultimate disposition will be characterized the same for tax purposes as the gain he realized and had recognized on the sale of his previously held stock.
I recognize that this proposal would not be applicable in circumstances such as those in United States v. Skelly Oil Co., supra, and Arrowsmith v. Commissioner, 344 U.S. 6 (1952), where no purchase was involved, but that should not prevent it from being applied in circumstances in which it might provide the better solution.