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U.S. Supreme Court

Botany Worsted Mills v. United States, 278 U.S. 282 (1929)

Botany Worsted Mills v. United States

No. 31

Submitted April 23, 1928

Argued November 20, 1928

Decided January 2, 1929

278 U.S. 282


1. No compromise of tax claims is authorized by § 3229 Rev.Stats. which is not assented to by the Secretary of the Treasury. P. 278 U. S. 288.

2. When a statute limits a thing to be done in a particular mode, it includes the negative of any other mode. P 278 U. S. 289.

3. The taxpayer filed a return of its net income for 1917 under the Revenue Act of 1916, and paid a tax computed on the basis of this return. An audit of the taxpayer's books disclosed the necessity of an additional assessment, and after much correspondence and numerous conferences with subordinate officials of the Bureau of chanroblesvirtualawlibrary

Page 278 U. S. 283

Internal Revenue, an amended return, based upon the figures agreed upon in the conferences, was filed by the taxpayer, and an additional assessment made on the basis of the amended return. The Secretary of the Treasury did not consent to this settlement, and no opinion of the Solicitor of Internal Revenue was filed in the office of the Commissioner. The taxpayer paid the additional tax and then sued to recover part of it back as having been illegally collected.


(1) That the informal settlement did not constitute a binding agreement. P. 278 U. S. 289.

(2) That the taxpayer was not estopped by the settlement from recovering any portion of the tax to which it might otherwise have been entitled. Id.

4. In a suit to recover taxes alleged to have been illegally collected, the burden of proving the illegality rests upon the taxpayer. Id.

5. Extraordinary, unusual, and extravagant amounts paid by a corporation to its officers in the guise and form of compensation for their services, but having no substantial relation to the measure of their services and being utterly disproportioned to their value, are not in reality payment for services, and cannot be regarded as "ordinary and necessary expenses" within the meaning of § 12a of the Revenue Act of 1916. P. 278 U. S. 292.

6. Such amounts do not become part of the "ordinary and necessary expenses" merely because the payments are made in accordance with an agreement between the taxpayer and its officers. Id.

7. Where the Court of Claims does not make a finding upon the ultimate question of fact upon which the rights of the parties depend, but merely makes findings as to subsidiary circumstantial facts which bear upon it, such findings will not support a judgment unless the circumstantial facts as found are such that the ultimate fact follows from them as a necessary inference and may be held to result as a conclusion of law. P. 278 U. S. 290.

63 Ct.Cls. 405 affirmed.

Certiorari, 276 U.S. 611, to a judgment of the Court of Claims dismissing a suit to recover taxes alleged to have been illegally collected. chanroblesvirtualawlibrary

Page 278 U. S. 284

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