The opinion
Davis, Judge,
dissenting:
Section 453(b) [“Sales of realty and and casual sales of personalty”], as enacted in the 1954 Code, is a murky piece of legislation which does not use the terms “installment method” or “installment plan” but harks back, in imprecise and uncertain fashion [“on the basis and in the manner prescribed in subsection (a)”], to subsection (a) which applies only to a dealer regularly selling on the “installment plan”. In addition, the relevant legislative history of subsection (b) is most unclear and subject to varying interpretation. This is the kind of statute which cries out for supplementation and clarification by regulation, and indeed *496 Congress specifically provided, within the subsection, for just such regulations to be promulgated. New regulations were in fact issued under the 1954 Code provision, and to my mind this case depends, not on the statute itself, but on the content of those regulations as they existed in 1968 when plaintiff acted.
Accordingly, my two differences with the court concern, first, the minimum statutory requirements which Congress itself imposed in 453(b) as the rock-bottom preconditions (apart from what could permissibly be required by regulation), and, second, the extent to which the Treasury had properly added to those core Congressional requirements by the time of plaintiff’s disposition in the fall of 1968. My position on these questions is: (1) section 453(b) does not mandate, by its own statutory force, a multiple payments requirement; (2) the subsection does, however, authorize the Treasury to impose such a precondition if it wishes, or conversely to omit it; (3) until Bev. Bui. 69-462, 1969-2 Cum. Bull. 107 (adopted in 1969), the Treasury did not establish such a requirement; and (4) Bev. Bui. 69-462 cannot validly be applied, retroactively, to taxpayer’s 1968 transaction:—
(1). I do not read subsection (b) as imposing, of its own statutory 'force, the mandatory precondition of multiple payments. That element is certainly not one spelled out in the text of the provision; the only requirements Congress specifically mandated for casual dispositions of personal property are that .(i) the price exceed $1,000, and (ii) either there be no payments in the year of disposition or those payments not exceed 30 percent. Nor, in the light of the wording and of the subsection’s history, is there need or warrant for implying the statutory condition that there must necessarily be more than one payment. The subsection, as I have noted, does not contain the word “installment”, and the reference back to subsection (a) can readily be understood as simply referring to the formula in (a) (2). Moreover, in the days before the 1954 Code the multiple payments requirement was twin, in birth and development, to the Condition that the initial payment be in the year of sale. The latter was deliberately erased in 1954, and, though nothing express was said about its brother, *497 the deletion of the “initial payments” language, to which both requirements were closely tied, seems to me to remove the ground for inferring an obligatory precondition of multiple payments from the mere fact that section 453 deals, in general, with “installment” transactions. The early official pronouncement in G.C.M. 12148, XII-2 Cum. Bull. 57, 58 (1933), had expressly equated “installment sales” and sales “on the installment plan” with the “initial payments” provision. 1 See also, E. M. Funsten, 44 B.T.A. 1166, 1169 (1941), acquiesced in, 1941-2 Cum. Bull. 5. With that part of the legislation removed, the status of the multiple payments requirement was left at large. 2
(2). Although section 453(b) does not itself impose a mandatory requirement of multiple payments, it is broad and general enough to authorize the Treasury, in its discretion, to do so — or to decline to do so. The internal grant of power to issue regulations shows the width of the administrative discretion. Added to that authorization are the opaque terms of the subsection and its muddy legislative history, elements suggesting that Congress may well have been quite uncertain of the reach of the provision and therefore amenable to fuller administrative power which might, or might not, take account of past practices (other than the requirement of an “initial payment”). The very materials and points which the majority use to show that subsection (b) itself establishes a multiple payments requirement seem to me to demonstrate, rather, that Congress left that option wholly to the Treasury, not foreclosing either result. If, directly *498 after the enactment in 1954 of subsection (b), the regulation-drafters had put the substance of Bey. Bui. 69-462 into regulatory form, I feel certain that would have been a valid exercise of authority. On the other hand, if the implementing regulations had explicitly declared that for the future a single deferred payment (within the statutory dimensions) was to be sufficient, that too would have been proper administrative action.
(3). What did the Treasury actually do? Taxpayer has a good case that, whatever the department may have subjectively intended, the regulations issued under the 1954 Code communicated the notion that a single deferred payment was now being covered under section 453(b) (if otherwise within the provision). First, the regulation (Treas. Beg. §§ 1.453-1, 1.453-2) recognizes throughout a clear distinction between dealer and non-dealer sales. As to the former, the directive refers to “the installment plan” and expressly requires that the sale be “paid for in two or more payments.” For non-dealers like plaintiff, there is no such stated condition of multiple payments; moreover, the references to “installment method”, “installment payments”, and “installment sales” — the words in the regulation which defendant stresses as incorporating a multiple payments pre-condition for non-dealers — are phrases which under the long-standing ruling in G.C.M. 12148, supra note 1, are not to be defined by the dictionary but are, instead, simply technical short-hand expressions for sales meeting the specific statutory conditions relating to the magnitude of the payments. See 2 J. MeeteNS, The Law oe Federal INCOME TaxatioN § 15.08, at 23-24 (1967 ed.).
Second, the Treasury deleted from the 1954 regulations a sentence, carried in the regulations from 1935 to 1954, which explicitly said: “If the entire purchase price is to be paid in a lump sum in a later year, there being no payment during the first year, the income may not be returned on the installment basis.” We are told that this was removed because of the excision of the “initial payments” requirement, but under the defendant’s present view the sentence would still be quite correct, despite the removal of the “initial pay *499 ment” language, and I can see no good reason for leaving it out entirely if the multiple payments condition was being continued. A knowledgeable taxpayer would be bound to notice and give meaning to the deliberate omission of this old provision, especially since the former multiple payments condition was so closely connected with the “initial payment” phrasing now taken out of the statute.
Whatever the regulation-drafters may have intended, the language they actually used, the failure to be explicit, the significant distinctions they made between dealers and non-dealers (including the express multiple payments requirement for the former), the omission of the crucial sentence from the previous regulations, the continued existence of G.C.M. 12148, all combine to make the taxpayer’s reading, as of 1968, not only reasonable but preferred. Cf. Lewis M. Ludlow, 36 T.C. 102, 108 (1961), acquiesced in, 1961-2 Cum. Bull. 5. 3
The Treasury should bear the risk of making its demands clear. Cf. Fruehauf Corp. v. United States, 201 Ct. Cl. 366, 380 , 477 F. 2d 568, 576 (1973) (concurring opinion). In this instance it wholly failed, until 1969, if its aim was to continue for non-dealers the requirement of multiple payments. Particularly with a mechanical and ritualistic obligation of this type — which serves no useful economic or tax purpose anyone can conjure up 4 — should the Government be at pains to be exact and clear. A taxpayer planning a transaction should be adequately informed in advance of what i’s to dot and t’s to cross. The penalty for omitting a purely technical step is too drastic to allow the Treasury to slide by with unduly general, ambiguous, and misleading regulations which are then interpreted by the Service, after *500 the event, to contain precise requirements a normal reader is unlikely to find in them. 5
(4). The Internal 'Revenue Service did finally make its position clear in 1969 in Rev. Rul. 69-462, but this came about a year after taxpayer’s transaction in October 1968. Since to me this was a decided change in the pre-existing administratively-imposed requirements, it is plain, on my view, that the new ruling could not fairly or validly be retroactively applied to plaintiff’s case. See Crespo v. United States, 185 Ct. Cl. 127 , 399 F. 2d 191 (1968); International Business Machines Corp. v. United States, 170 Ct. Cl. 357 , 343 F. 2d 914 (1965), cert. denied, 382 U.S. 1028 (1966); Chock Full O'Nuts Corp. v. United States, 453 F. 2d 300, 302-03 (C.A. 2,1971). Future sellers would be appropriately alerted by the new ruling, but not plaintiff. It is entitled to have applied to it the regulations as they stood in 1968, and not as they were de facto amended in 1969 to add a significant additional requirement.
Kunzig, Judge, joins in the foregoing dissenting opinion.
in* * * Qijjg regulations of the Bureau imply that the only test of whether a sale is ‘on the installment plan’ is whether the ‘initial payments’ exceed the percentage of the selling price specified in the statute. * * * Moreover, even if this implication were not in the regulations, there is no express requirement in [the 1926, 1928, or 1932 legislation] that casual sales of real property * * * [be], ‘installment sales’ in order to permit the return of income on the installment basis, the only requirement in the statutes being that the ‘initial payments’ must not exceed [a specified]' percent of the selling price * * *.”
The scraps from the legislative history of section 453 on which defendant calls can be easily interpreted as referring either to the prior “initial payments” provision or to deferred-payment contracts failing to meet the statutory conditions as to magnitude — not to multiple payments per se. There is nothing in the history which points directly or clearly to maintenance of the multiple payments requirement, let alone the obligatory continuance of that condition.
The recent Tax Court decision in 10-iZ Corporation, 55 T.C. 593 (1971)— upholding the Government’s stance — does not discuss the changes in the regulations from pre-1954 days, and we are told that these and other pertinent materials were probably not called to the court’s attention.
So far as I am aware, no real substantive purpose is served by the multiple payments requirement, limited as it is to two payments. Plaintiff could have met it, if it had been warned, by arranging for two payments, instead of one, in November 1968 or October-November 1968. Apparently one of the payments could even be a nominal one dollar. G.C.M. 12148, supra.
The report of the House Ways and Means Committee preceding the Tax Reform Act of 1969, 83 Stat. 487 , says that the committee was concerned “with the uncertainty in present law as to the number of installment payments which are required in order for a transaction to be eligible for the installment sales method.” Although it decries the application of the installment provisions to such transactions, the report appears to recognize that under the then prevailing practice the method was being allowed “where there is only one installment payment [as here] or only a limited number of payments”, including “when the one installment payment is deferred for a long period of time.” H.R. Rep. NO. 91-413, Part 1, 91st Cong., 1st Sess. 108 (1969-3 Cum. Bull. 200, 267).