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HELVERING V. WINMILL, 305 U. S. 79 (1938)

U.S. Supreme Court

Helvering v. Winmill, 305 U.S. 79 (1938)

Helvering v. Winmill

No. 11

Argued October 12, 1938

Decided November 7, 1938

305 U.S. 79


1. Brokerage commissions paid or incurred in purchasing securities during the taxable year by a taxpayer engaged in buying and selling securities as a business are not deductible as "compensation for personal services" under § 23(a), Revenue Act of 1932, but are expenditures properly chargeable to capital account as constituting part of the cost of the securities purchased, deduction of

Page 305 U. S. 80

which, in case of loss from sales, is limited by §§ 111 and 23(r) of the Act; T.R. 77, Art. 282. P. 305 U. S. 81.

2. Treasury regulations and interpretations long continued without substantial change, applying to unamended or substantially reenacted statutes, are deemed to have received congressional approval, and have the effect of law. P. 305 U. S. 82.

3. The general provision of T.R. 77, Art. 121, that "[a]mong the items included in business expenses are . . . commissions," is limited by the special provision of id., Art. 282, designating security purchase commissions as a "part of the cost price of such securities." P. 305 U. S. 83.

4. The addition of § 23(r) of the Revenue Act of 1932 did not indicate a purpose to alter or repeal the administrative interpretation under which brokers' commissions have uniformly been construed as a part of the cost of the securities purchased, and not as current business expenses. P. 305 U. S. 84.

5. Congress has power to limit or deny deductions from gross income in the computation of income taxes. P. 305 U. S. 84.

93 F.2d 494 reversed.

Certiorari, 303 U.S. 633, to review a judgment which reversed a decision of the Board of Tax Appeals, 35 B.T.A. 804, sustaining an income tax assessment.

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