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U.S. Supreme Court

Fawcus Machine Co. v. United States, 282 U.S. 375 (1931)

Fawcus Machine Co. v. United States

No. 40

Argued December 12, 1930

Decided January 5, 1931

282 U.S. 375


1. Administrative regulations contemporaneously construing a statute and made for its enforcement under an express general authorization contained therein, and which are not unreasonable or inconsistent with the statute, will not be overruled except for weighty reasons. P. 282 U. S. 378. chanrobles.com-red

Page 282 U. S. 376

2. In accordance with Article 845 of Treasury Regulations 45, applicable to the Revenue Act of 1918, and which provides that "federal income . . . taxes are deemed to have been paid out of the net income of the taxable year for which they are levied," the Commissioner of Internal Revenue determined that the invested capital for 1919 of a corporate taxpayer which kept its books and made returns on the accrual basis should be reduced, in its return for the taxable year 1919, by the amount of income and excess profits taxes for 1918, as of the dates in 1919 when the installments of taxes fell due and were paid. This computation resulted in an alleged overpayment of excess profits taxes which the taxpayer sued to recover.


(1) The regulation was reasonable and consistent with the Act of 1918. P. 282 U. S. 378.

(2) In view of the facts that the Act of 1917 required the payment of the same sort of taxes; that the petitioner actually accrued its taxes for 1918 and set them up in a reserve at the end of the year; that taxpayers understood that the policy of the government with respect to income and excess profits taxes was continuous, and that a Treasury Decision, in substance the same as Article 845, was applicable to the 1917 Act, the regulation was not unreasonable as applied to 1918 taxes, notwithstanding that the Revenue Act of 1918 was not passed until February, 1919, and the taxpayer could not know at the close of 1918 what the exact amount of its taxes for that year would be. P. 282 U. S. 379.

68 Ct.Cls. 784 affirmed.

Certiorari, 281 U.S. 711, to review a judgment of the Court of Claims in favor of the United States in an action brought by a taxpayer to recover an alleged overpayment of excess profits taxes for the year 1919. chanrobles.com-red

Page 282 U. S. 377


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