- 20 -
argument, we therein stated "that we have several times denied
taxpayers deductions for losses due to inflation, on grounds that
the tax law is not written to account for inflation." Id. at
1363.10 We further determined that nominal gain is taxable because
of (1) the doctrine "that Congress has the power and authority to
establish the dollar as a unit of legal value with respect to the
determination of taxable income, independent of any value the
dollar might also have as a commodity" (citations omitted), and (2)
the doctrine of common interpretation, which defines income on the
basis of the understanding of a lay person, not an economist. Id.
at 1364, 1366. We held in the Commissioner's favor, concluding
that (1) the taxpayers' use of the Consumer Price Index (including
any other method measuring inflation) to calculate taxable income
is irrelevant, and (2) nominal gain is taxable income. Id. at
1363-1364; see also Sibla v. Commissioner, 68 T.C. 422, 430-431
(1977) (holding that the taxpayer was neither entitled to a
deduction nor any other adjustment to his gross income because of
the fact that the value of a dollar may have declined in relation
to silver or gold), affd. 611 F.2d 1260 (9th Cir. 1980); Gajewski
v. Commissioner, 67 T.C. 181, 194-195 (1976) (holding that the
value of the dollar is "irrelevant for purposes of computing * * *
[a taxpayer's] taxable income", and "for purposes of the tax law,
10 We note that when Congress desires to take inflation
into account, it does so by statute. See, e.g., secs. 1(f), 151.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011