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interest coupons; taxpayer remains taxable on the income that he
would have received but for the transfer). The Supreme Court
made clear that these results were based on the Court’s reading
of the statute as to what was income of the taxpayer rather than
income of another; the intended result was to tax the taxpayer on
the income the taxpayer would have had if he or she had acted to
“earn” the income but had not acted to deflect the income.
Those seminal cases did not present disputes about the
amount of the income, but they focused on whether the taxpayer
had succeeded in deflecting the taxation of it to others.
As the majority opinion notes, there is later case law
dealing with how to measure the amount of the income. This case
law is, in part, responding to needs to interpret and apply
intricate “spread-back” provisions and, in part, to fill in the
gaps in statutory text that become evident when a statute has to
be applied to the real world. The concepts developed by the
courts seemed to be reasonable and seemed to produce reasonable
results. However, the statutory background has changed over the
decades. For example the Congress repealed more than 30 years
ago the statute referred to in the majority opinion’s quotation
(majority op. p. 21) from O’Brien v. Commissioner, 38 T.C. 707,
710 (1962), affd. 319 F.2d 532 (3d Cir. 1963). Application of
court-made rules to the new background has exposed analytical
errors that were originally overlooked because the harm created
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