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affiliated group) was required to compute “accumulated taxable
income” (for purposes of the accumulated earnings tax, section
531) on a consolidated basis as the Commissioner contended, or on
a separate-company basis as the taxpayer contended. Under one
set of proposed regulations, certain taxpayers (including the
taxpayer in Gottesman & Co.) would have computed accumulated
taxable income on a separate company basis. Those proposed
regulations were withdrawn prior to the years in issue in
Gottesman & Co.; proposed regulations reaching the opposite
result were promulgated after those years. In holding for the
taxpayer, we concluded, against this background, that the
Commissioner’s silence during the years in issue had failed to
provide sufficient guidance to the taxpayer:
Though the 1968 proposed regulations were withdrawn in
1971, before the years involved in this case, we can
readily understand petitioner’s confusion as to
respondent’s true position * * *. * * *
We cannot fault petitioner for not knowing what
the law was in this area when the Commissioner, charged
by Congress to announce the law (sec. 1502), never
decided what it was himself. * * *
Thus, we find that the Commissioner’s regulations
regarding the manner in which the accumulated earnings
tax was to be imposed on corporations making
consolidated returns were ambiguous during the years at
issue. This ambiguity was of the Commissioner’s
making, and, as such, must be held against him. * * *
We think that under these circumstances the failure of
petitioner to comply with respondent’s post hoc view of
the regulations is an insufficient ground on which to
impose the accumulated earnings tax, and we hold for
petitioner on the issues herein presented.4
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