- 41 -
For example, another canon of construction, applied in
Smietanka v. First Trust & Sav. Bank, 257 U.S. 602, 607 (1922),
on the effect of material added on reenactment, not material
omitted, cuts against the majority’s argument. In First Trust &
Sav. Bank, the Supreme Court treated the addition of an express
rule, by a later enactment, as proof the rule was not included in
the analogous provisions of an earlier statute.
The 1994 final regulations expressly state that a
shareholder’s activities include those conducted through C
corporations subject to section 469. The silent 1992 proposed
regulations contained no such participation/attribution rule.
Therefore, the First Trust & Sav. Bank canon of construction
suggests that shareholders did not participate in C corporation
activities under the 1992 proposed regulations. As the Supreme
Court concluded in First Trust & Sav. Bank, where a provision has
been added to a later act, a court cannot supply the omission in
the earlier act.17
16(...continued)
deleted this language. Applying the majority’s canon, one would
conclude the Commissioner intended shareholders to participate in
C corporation activities under the later regulation. However,
this was not the case, as the activity definition of the 1989
temporary regulations clearly shows. See supra pp. 32-34.
17 One other point: the cases cited by the majority to
support their canons of construction argument concern situations
where an express rule was clearly required to sustain a party’s
position. For example, Independent Ins. Agents of Am., Inc. v.
Clarke, 955 F.2d 731 (D.C. Cir. 1992), revd. on other grounds sub
nom. United States Natl. Bank v. Independent Ins. Agents of Am.,
(continued...)
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