CERTIORARI TO THE COURT OF CLAIMS.
Hughes, McReynolds, Brandeis, Butler, Stone, Roberts, Black, Reed
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
The question is whether the 15 per centum allowed as a deduction for charitable contributions under § 23 (n) of
the Revenue Act of 1932 is to be calculated on the taxpayer's net income computed without regard to a capital net loss as to which special provision is made by § 101 (b).
Section 23 (n) provides that in computing net income there shall be allowed as a deduction from gross income --
"In the case of an individual, contributions or gifts made within the taxable year to or for the use of: . . . to an amount which in all the above cases combined does not exceed 15 per centum of the taxpayer's net income as computed without the benefit of this subsection." 47 Stat. 181-182.
Respondent in 1932 made charitable contributions to the amount of $3496. His net income, irrespective of a capital net loss, was determined by the Commissioner to be $94,963.52. Upon that net income the Commissioner assessed the normal tax and surtax at the rates prescribed by §§ 11 and 12.*fn1 Respondent contended that this was his net income as described in § 23 (n) and that as his charitable contributions were less than 15 per centum of that amount they were deductible in full in determining his normal tax and surtax. The Commissioner refused to allow the deduction.
The taxpayer had sustained a "capital net loss," as defined in § 101(c)(6), of $154,921.98. The Commissioner ruled that "Since the capital loss of $154,921.98 is in excess of adjusted ordinary net income of $94,963.52
(without contributions) there is no net income against which to make a deduction for contributions."
Having paid the tax assessed by the Commissioner upon that theory, respondent filed his claim for a refund and on its rejection brought this suit in the Court of Claims. Judgment was rendered in his favor. 22 F.Supp. 964. Because of an asserted conflict with decisions of Circuit Courts of Appeals*fn2 and with our ...