The opinion
*340 On Rehearing.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
AUGUSTUS N. HAND, Circuit Judge.
We have allowed a rehearing of this appeal because the applicability of Higgins v. Smith, 308 U.S. 473 , 60 S.Ct. 355 , 84 L.Ed. 406 , was not discussed on the former argument. We are satisfied that upon the record presented to the Board of Tax Appeals the decision in Higgins v. Smith, supra, governs the case and that the assignment by the taxpayer to the Eastern Chemical Corporation of his entire undivided one-half interest “in the claim of Burroughs & Brown * * * for legal services” should be disregarded in determining his income tax liability.
The petitioner seeks to limit the scope of Higgins v. Smith to situations in which a taxpayer is attempting to obtain a credit for a loss upon a sale of property which he has sold to it. We can see no justification for such a limitation. The reason for disregarding a wholly owned corporation when its sole stockholder seeks such a credit is that he controls the receipts of the assignee as completely as he would in a case like Lucas v. Earl, 281 U.S. 111 , 50 S.Ct. 241 , 74 L.Ed. 731 , where earnings had been assigned but could only be realized upon his performance of future services. “It is command of income and its benefits which marks the real owner of property.” Higgins v. Smith, 308 U.S. at page 478 , 60 S.Ct. at page 358 , 84 L.Ed. 406 . Here the taxpayer not only controlled the action of his corporation but also personally arranged the settlement of the claim of Burroughs & Brown and in person received and endorsed over the checks delivered by the client in payment of his half of the fees.
The taxpayer’s contention that Section 112 (b) (5) of the Revenue Act of 1932 will relieve him from the claimed income tax deficiency is without basis. The Commissioner made no attempt to tax gain resulting from the exchange of the cause of action to recover for legal services for stock in the Eastern Chemical Corporation and nothing but gain resulting from such an exchange would come within the terms of the statute.
In our former opinion we assumed that the gift by the taxpayer to his wife of all his stock in the Eastern Chemical Corporation was subsequent to the settlement and collection of his claim for legal services. He now offers to prove that the gift was prior and, in order to do this, asks to have the case remanded to the Board with instructions to it to find the dates and to determine that no tax deficiency exists if it should be found that the gift of the stock was antecedent to the settlement of the claim. But in dealing with decisions of the Board no such procedure is permissible for under U.S.C. Title 26, § 1141 (c) (1), 26 U.S.C.A. Int.Rev.Code, § 1141 (c) (1), we may only “modify” or “reverse” the Board if its decision “is not in accordance with law.”
On the record before us the Board committed no error. If a gift of the stock prior to the settlement of the claim by the taxpayer or his receipt of payment from his client would determine the alleged tax deficiency in his favor he had the burden of proving before the Board that the gift was prior and failed to do this. As the proof stood he assigned the claim to recover for legal services to a corporation of which he was the sole stockholder and he himself collected it. The gift of the stock to his wife which appears in the record was irrelevant unless he showed when it occurred for it may have been subsequent to settlement and payment of the claim. In that case he would have been collecting the money for a corporation of which he was the sole owner.
While we cannot remand a proceeding to the Board where no error in law has been committed we may allow the taxpayer to apply to it for leave to offer evidence as to the date of his gift of the stock and to obtain a rehearing and decision by the Board upon the original and such a supplemental record. Houston v. Commissioner, 3 Cir., 53 F.2d 445 ; Thom v. Burnet, 60 App.D.C. 414 , 55 F.2d 1039 ; Commissioner v. Erickson, 1 Cir., 74 F.2d 327, 330 . The decision in Chatham Phenix Nat. Bank & Trust Co. v. Helvering, 66 App.D.C. 330 , 87 F.2d 547, 550 , seems to conflict with the earlier one by the same court in Thom v. Burnet, supra, and to go beyond the statutory power of review granted to courts of appeal.
After the Supreme Court has rendered its decision upon the pending review of Eubank v. Commissioner, 2 Cir., 110 F.2d 737 , the dates of the gift of the stock may become unimportant. We leave the question whether to reopen the case and, if it be reopened by the Board, how to decide it wholly to the latter.
*341 On the record before us we adhere to affirmance of the order of the Board of Tax Appeals, but without prejudice to an application to it by the taxpayer for leave to present further evidence as to the date and circumstances attending the gift of the stock and if such leave be granted for a rehearing before the Board upon the record as thus supplemented.