# Petition for Rehearing — C. D. Construction Corp. v. Commissioner > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_0457%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Rehearing - **Published:** January 1, 1972 - **Citation:** 405 U.S. 988 ## Text = COURT, U, 8 — IN THE Cxtober Term, 197 | ® - No. 71-852 - = a: « 3) ae ; : —————— Sa " : - - goo. C. D-ConstRUcTION CoRPORATION, fe ; ows Petitioner,. vs. 7 a N COMMISSIONER OF INTERNAL REVENUE. : : ‘Regpondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit. ! - Petition for Rehearing and Supplemental Brief. re | GEORGE T. ALTMAN, "424 South Beverly Drive, + Beverly Hills, Calif. 90212. Attorney for Petitioner. Of Cocoa: . STANLEY H. WILEN, ase 326 St. Paul Place, : . Baltimore, Md... 21202. Parker & Son, Inc., Law Printers, Los Angeles. Phone 724-6622 any PRR ee a ee ee pe ercerragd werner state aE AAD SORTED seh OR New. we ’ . . . . . . ne . i. . hs » . ” . t. are “a on . - ey e : . ly . / / . : : e . . ; . . - = . , ’ ~. e a. s ‘ ne 5 ° . . . . 3 Pot » c oy ‘ . . . : ~ ® . « ' oS ae . . =: . - ~~ a P . ae - . y ig 4 . . - x! ° . ‘ . - 7 ‘ 3 - . . * . . ” . ‘ . . 2. : , are ; ® . 4 = . ‘ ° . ok n ’ 2 . ‘ ‘ . . re . « . . , . ‘ he . a Pe ; . > , ‘ A? . : ‘ be! . . ‘ . ‘ . ‘ : . . : . . . ‘ . " ’ ‘ “e com ar) , e . ey . . ‘ . 5 . : . . ‘ : ‘ ’ : * . tee ° - *¢ ’ j . % -- 2 . ° ’ ‘ eae . a. , Ue a , . ~~ e o . ter Z IN ‘THE suprem Court of the United States [7 - % ° October Tesi a7 1 Ra: 73-852. 6 : “ a oats : : 7 C. D. CONSTRUCTION CORPORABION, ‘ : ; oy | Petitioner, : VS, COMMISSIONER Or INTERNAL REVENUE. | | } ‘Respondent. Sennen . On Petition for a Writ of Ceréersri to the United States Hoi Court of Appeals for the Vourth Ciecuit. Petition for Rehearing and Supplemental Brief. ee Petitioner hereby ‘pstitions this Court of those inconsistencies we shall refer to - {Wo excerpts from the opinion of the Court below in the _ related C ‘harles Town, Inc. case, 372 F. -” 415. bisa are _shown i in the footnote below.’ ‘The essence of this Court's: position in The First . pe Bank case is stated in the a Se quotation from its opinion: “In cases dealing with the enpat of income, it has been assumed that the person, to whoni the inceme was attributed could have received it.” ” ‘Thus the Court places io a separate category income “ac? tually réceived by a person whether or rightfully received: and where the income is not actually received by the person, the attribution.of the income to him is - limited to situations in which he could have received if, and could-have receivéd it rightfully. Generating the incomy. oF carning. it, is not cnough. Income not re- ceived by a person cannot be’ a{jributed to cap ve it. he had. not‘ just the power, but the right to For this reason we point out again, as we did in pur original petition, at p. 7. that nowhere did cither the court below. or the Tax Court, challenge the: validity. tM? fairness, or the reasonableness, of cither of the con- ttacts between Charles Town, Inc. apd Fairmount Steel Corporation (hereinafter referred to as Charles Town and Fairmount, respectively). And how, abserit such a - *At 16: “The Commissioner's allocation wide? Sectiow 48> le’ peodhented’ cn the siaged shifting of ques trom on controlled entity (Charies Town) ta another (Fairmount) for the Pure of unhzing net operating loss carryovers of the latter.” At page 418 “Fairmount’s return for its fiscal year ended jum? 30, 1959. showtd ‘o net profit of $732,299.86 from the recnr mocts. but becadse of its allowable nct opcrating hows carryover, a peld no federal incom? ton an Gils cmnedet:” ae e-« _ challenge, Chartes Town had the right ae nasal to receive the income attributed to it. under Section 482, as its income, oe Serene tH, des niver oven been “argued. by respondent. 2. Since the present proceeding presents caty the liability of petitioner's predecessor, Fairmount, as trans- . feree of Charles Town, we do not; of course, question against it became final, regardless of its itt This makes all the more important, however, the point shown at pp. 12-13 of our original petition that a jiability for . taxes determined under Section 482 is not self-assessing. and the conclusion which follows therefrom, as stated in Interstate Fire Insarance Company v. U.S”. 215 F. Supp. 586, 598, afficmed. “in all things” and for “the reasons set forth therein,” €.A. 6, 339 F.2d 603: “The use and application of section 482 does not result in * an enforcible tax consequence gntil there has been a reallocation resulting in a reassessment of taxes.” To this must now be added, because of this Court's decision in No. 70-305, « correct reallocation resulting in a re- assessment of taxes. - Si tiae Galas: caatiadl iohtien ts hes dina of the Sixth Circuit. But certainly that does not erase the conflict with it, : 3: This Court, in its opinion in No. 70-305, makes it clear that a right cannot be assumed if it is. one pro- hibited by law. Yet the Court Below bercin treated Fairmount in substance as a stockholder of Charles Town even though, under the law of the state. as shown in our original petition. at p. 9. Charles Town had no authority to issue the stock so imputed. [t follows that the treatment by the Cou below, of Faitmount as in substance a ‘stockholder of Charles Town, ‘is in con- flict, -not only with: Commissioner v. Stern, 357 US. 39, but with the decision now of this Court in) No. 70.305. =~ “. We take advantage of this potnt also to repeat that this issue of stockholding “in substance” was net raised here ins the Tax Court, the trial court. The least that the Court below should have done was to return the case to that Court for retrial on that issuc. 4. -We come now to the excerpts frem the Charles To¥en, Ine. case shown in footnote | above. As shown there, the Court below obscfved that the Commission: er’s allocation under Section 482. was “predicated on . the alleged shifting of the profits from one controlled | entity (Charles Town) to another (Fairmount) for the purpose of utilizing net operating loss carryovers of the latter.” . e al « In No. 70-305; in footnote 4. this Court makes it clear*that Section 482 could not be used for any such purpose. I, could not be used. this Court there said. to prevent taxpayers from “lawful structuring . jof their business affairs! to Mumimize taxes.” Ht could not be used ° then to prevert.a taxpayer from structuring hes business affairs so as to be able to deduct net operating losses in- curred. Indeed. if a ‘tax could ever be said to be immoral “it would be so if because of mere artificial corporate barriers the very persons whose ‘control resulted in the application of Section 482 could not deduct their net operating losses. We submit .the purpose stated iby the Court below for the application of that section is in. -clear conflict with this Court's opinion in No. 70-305. “For the reasons stated above: we urge grant of the writ of certiorari, At least, in view of the fact that we had no opportunity to apply the new ground stated by this ‘Court in No. 70-305 before it’ acted on our peti- tion for the writ, we suggest alternatively that the case be sent back to the Court below, in “accordance with the practice in this Court, for reconsideration in the livht of this Court's opinion in No." 70-3052 as well as reconsideration. of the issue of stockholding “in substance” not raiséd, as noted above, in the trial court.” Respectfully submitted, GEORGE T. ALTMAN, Attorney for Petitionér: “OF Counsel: _ STANLEY H. WiLEN, | } “See Supreme Court Practice by Stern and Gressman. Fourth Ed.-p. 221 at fn 32 and the numerous cases cited there on r. same point. a : —-o—. Certificate of Counsel. This petition for rehearing is presented in good faith and not for delay and is. restricted to the erounds stated in Rule S8{2). a ~ Coporare PT. At raran - = ie - - 5 e z ies es APA ee LER DLL ELA L LI DRGED SALLE LOO TE . = a > sm - oe « / - . , ° od q ° + . - : 7 . . i . . . ; . - - og = " - * > . . - ne . . . - Z ° . . . . - " 2 . - ° “* a é os . ad . * s ¥ . . . : s+ eo . . ad . -_* c ° - » hs . . » = . © ; . * . . * ‘i 7 ~* = . - - : . ‘ * ‘. 4 : ‘ - * i o : - - * m % * . “ * - . - - = . - - . - - - . . - . : *. > : . - . . . : . * - : . : \ a « a . + e , - * ™ : --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_0457%3A4. Public record. Not legal advice.