Douglass H. and Suzanne M. Bartley - Page 20

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          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.           

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