- 35 -
the valuation of livestock is ordinary and necessary to the
conduct of a livestock business because people may disagree on
the value of livestock. Id. at 603.
Shortly thereafter, this Court reached a result consistent
with Polk and Standing in our Court-reviewed opinion in Reise v.
Commissioner, 35 T.C. 571 (1961), affd. 299 F.2d 380 (7th Cir.
1962). We held in Reise that State income taxes, deficiencies in
State income taxes, interest on State and Federal income taxes,
and litigation expenses relating primarily to an individual's
business income were deductible as ordinary and necessary
business expenses in computing an NOL carryback. We carefully
reviewed the relevant statutes, the legislative history, the
administrative interpretations of these provisions, and the
caselaw (including Polk, Standing, Maxcy, and Aaron). We
concluded that Standing and Polk are "sound and correct", and
Aaron is not. Id. at 579. We applied the rationale of Polk and
Standing, and we overruled Aaron as an improper and incorrect
construction of section 122(d)(5) of the 1939 Code.4 Id. at 579.
This and other Courts have steadfastly followed the judicial
reasoning that we enunciated in Reise, Polk, and Standing.
Indeed, in Estate of Broadhead v. Commissioner, T.C. Memo
1966-26, affd. 391 F.2d 841 (5th Cir. 1968), we were obliged to
distinguish Standing, in holding that the taxpayer could not
claim a business expense deduction for interest on his Federal
4 The text of sec. 122(d)(5) of the 1939 Code is virtually
identical to the text of sec. 172(d)(4).
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011