Public-domain · open source
OpenJurist

11 B.T.A. 301

Smith v. Commissioner

United States Board of Tax Appeals

Decided March 29, 1928

United States Board of Tax Appeals · decided 1928-03-29

Taxes imposed by Houston County Levee District No. 1 of the State of Texas for the construction and maintenance of a levee, which were levied against and paid by petitioners in 1923, are not deductible from gross income.

Key passage — most relied on by later courts

“The petitioners contend, first, that the taxes in question are constitutional taxes for a public purpose and as such are deductible under section 214(a) (3) of the Revenue Act of 1921; and, second, that if they are not such taxes, then the amount thereof used for paying interest on the bonds is deductible under section 214(a) (2) of the 1921 Act as interest paid. We do not deem it necessary to go into the constitutional and statutory provisions of the law of Texas with reference to the taxes in question. The Supreme Court of Texas has held the payments to be taxes for local improvements cr, in other words, assessments. See Dallas County Levee District No. 2 v. Looney, 207 S. W. 310 ; Dallas County Levee Improvement District No. 3 v. Ayers et al., 246 S. W. 1112 . In Caldwell Milling Co., 3 B. T. A. 1232, the Board construed section 234(a) (3) (c) of the Revenue Act of 1918 to mean special or local assessments as a class and as such not deductible. Our reasoning therein applies with equal force to the provision of section 214(a) (3) (c) of the 1921 Act. It is clear, therefore, that petitioners’ first contention is unsound and can not be sustained. However, petitioners contend that that part of the assessment paid in 1923 which was used for the purpose of paying interest on the bonds issued by Houston Levee District No. 1 is deductible as interest paid under section 214(a) (2) of the 1921 Act. With this contention we can not agree. The bonds were the obligation of the Levee Dis”

quoted by 1 later decision, including Comstock v. Commissioner

Relies on Dallas Country Levee District No. 2 v. Looney · Dallas County Levee Improvement Dist. No. 3 v. Ayers · Caldwell Milling Co. v. Commissioner

Good law ✅— No negative treatment on recordhow we know

Decided 1928-03-29

How this case has been cited

Cited by 8 later decisions — most recently April 1950

301928193019401950decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

¶1*302OPINION.

Love :

¶2The petitioners contend, first, that the taxes in question are constitutional taxes for a public purpose and as such are deductible under section 214 (a) (3) of the Revenue Act of 1921; and second, that if they are not such taxes, then the amount thereof used for paying interest on the bonds is deductible under section 214 (a) (2) of the 1921 Act as interest paid.

¶3We do not deem it necessary to go into the constitutional and statutory provisions of the law of Texas with reference to the taxes in question. The Supreme Court of Texas has held the payments to be taxes for local improvements or, in other words, assessments. See Dallas County Levee District No. 2 v. Looney, 207 S. W. 310; Dallas County Levee Improvement District No. 3 v. Ayers et al., 246 S. W. 1112.

¶4In Caldwell Milling Co., 3 B. T. A. 1232, the Board construed section 234 (a) (3) (c) of the Revenue Act of 1918 to mean special or local assessments as a class and as such not deductible. Our reasoning therein applies with equal force to the provision of section *303214 (a) (3) (c) of the 1921 Act. It is clear, therefore, that petitioners’ first contention is unsound and can not be sustained.

¶5However, petitioners contend that that part of the assessment paid in 1923 which was used for the purpose of paying interest on the bonds issued by Houston Levee District No. 1 is deductible as interest paid under section 214 (a) (2) of the 1921 Act. With this contention we can not agree.

¶6The bonds were the obligation of the Levee District and not of the individuals. The assessment of the taxes in question can not be said to constitute a payment of interest on a personal obligation.

¶7The Commissioner’s action is, therefore, sustained.

¶8Judgment vrill be entered for the respondent.

/11/bta/301 · .json · Public domain