- 25 -
Finally, the Supreme Court has repeatedly held that
exemptions as well as deductions are a matter of legislative
grace, and that a taxpayer seeking either must demonstrate that
he comes squarely within the terms of the law conferring the
benefit sought.7 Bingler v. Johnson, 394 U.S. 741, 751-752
(1969); Commissioner v. Jacobson, 336 U.S. 28, 48-49 (1949);
United States v. Stewart, 311 U.S. at 71; Helvering v. Northwest
Steel Rolling Mills, 311 U.S. 46, 49 (1940); New Colonial Ice Co.
v. Helvering, 292 U.S. 435, 440 (1934). In that vein, we have
sustained and applied this proposition. See, e.g., Nelson v.
Commissioner, 30 T.C. 1151, 1154 (1958).
In this instance, borrowed funds are excluded from income in
the first instance because the corporation's obligation to repay
the funds offsets any increase in the corporation's assets; if
7The Supreme Court, over a century ago, observed:
These cases show the principle upon which is
founded the rule that a claim for exemption from
taxation must be clearly made out. Taxes being the
sole means by which sovereignties can maintain their
existence, any claim on the part of any one to be
exempt from the full payment of his share of taxes on
any portion of his property must on that account be
clearly defined and founded upon plain language. There
must be no doubt or ambiguity in the language used upon
which the claim to the exemption is founded. It has
been said that a well-founded doubt is fatal to the
claim; no implication will be indulged in for the
purpose of construing the language used as giving the
claim for exemption where such claim is not founded
upon the plain and clearly expressed intention of the
taxing power. [Bank of Commerce v. Tennessee, 161 U.S.
134, 146 (1896).]
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011