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U.S. Supreme Court

Helvering v. R. J. Reynolds Tobacco Co., 306 U.S. 110 (1939)

Helvering v. R. J. Reynolds Tobacco Co.

No. 328

Argued January 6, 1939

Decided January 30, 1939

306 U.S. 110


1. Section 22(a) of the Revenue Act of 1928, defining gross income, was so general in its terms that an interpretative administrative regulation determining whether it included gain from the resale by a corporation of its own stock was appropriate. P. 306 U. S. 114.

2. Article 66 of Treasury Regulations 74, promulgated under the Revenue Act of 1928, specifically provided that, for the purpose chanroblesvirtualawlibrary

Page 306 U. S. 111

of the income tax, no gain or loss is realized by a corporation from the purchase or sale of its own stock. This administrative construction of sections of the revenue acts defining gross income had been uniform since at least 1920. May 2, 1934, before the 1929 tax of the corporate taxpayer herein had been finally determined, the Treasury adopted an amendment to Article 66 subjecting to tax any gain derived by a corporation from the sale of its own shares where it "deals in its own shares as it might in the shares of another corporation."


(1) The ascertainment of gain by the corporation for the taxable year 1929 is to be determined in conformity to the regulation then in force, and not by the amendment. P. 306 U. S. 115.

(2) The regulation in force in the taxable year 1929 must be taken to have been approved and to have been given the force of law by Congress. P. 306 U. S.

(3) Section 605 of the 1928 Act did not authorize the Treasury to repeal the rule of law that existed during the period for which the tax was imposed. P. 306 U. S. 116.

(4) The reenactment of § 22(a) in the Revenue Acts of 1936 and 1938, without more, may not be taken as sanction by Congress of a retroactive application of the amended regulation. P. 306 U. S. 117.

97 F.2d 302 affirmed.

Certiorari, 305 U.S. 587, to review the reversal of a decision of the Board of Tax Appeals, 35 B.T.A. 949, which sustained the Commissioner's determination of a deficiency in income tax.

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