Friday, April 15, 2011
Footnote of the Day: Taxes and Numbers
Tax day, usually April 15 but this year with a filing extension until Monday, remains a suitable day to appreciate numeracy and try to maintain a sense of humor. The law review article, The Law of Prime Numbers, 68 NYU Law Review 185 (1993), authored by 19 authors, attempts to do both.
Slight on text, the article's footnotes are appreciations of individual prime numbers. Footnote “l” of the article highlights the prime number “37” with a discussion of a famous tax footnote, a more loosely linked interpretative question, and an even more tangentially related, but exceedingly important, constitutional criminal procedure case:
37 was the footnote number in Crane v. Commissioner, 331 U.S. 1, 14 (1947), in which the Supreme Court set forth a proposition that would bedevil tax practitioners and scholars for decades. In what has come to be acknowledged as the most famous footnote in tax history, see Boris I. Bittker, Tax Shelters, Nonrecourse Debt and the Crane Case, 33 Tax L.Rev. 277 (1978), the Court suggested that the inclusion in income occurring on the relief of a liability for which the taxpayer had no personal liability should be limited to the fair market value of the property securing the debt, rather than the full amount of the debt. It was not until the Court revisited the issue in 1983, in Commissioner v. Tufts, 461 U.S. 300, 307 (1983), that footnote 37 was repudiated, laying the issue to rest (we think). In the intervening period, however, much effort was consumed in the pursuit of the true meaning of this cryptic footnote. See, e.g., Christian C. Day, Commissioner v. Tufts: The Fall of Footnote 37; The Confirmation of the Functional Relationship, 45 U.Pitt.L.Rev. 803, 804 n. 3 (1984) (“If footnote 37 did not launch a thousand ships, it certainly killed more than its share of trees in its day and still continues to do so.”).
37 dollars was the price per 100 pounds of chicken established in the contract at the heart of Frigaliment Importing Co. v. B.N.S. Int'l Sales Corp., 190 F.Supp. 116, 117 (S.D.N.Y.1960). A dispute arose between the buyer (plaintiff) and seller (defendant) as to whether the chickens that were delivered met the specifications of the contract. Judge Friendly faced the difficult hermeneutical issue of just what, exactly, is a “chicken”:
Plaintiff says “chicken” means a young chicken, suitable for broiling and frying. Defendant says “chicken” means any bird of that genus that meets contract specifications on weight and quality, including what it calls “stewing chicken” and plaintiff pejoratively terms “fowl.” Dictionaries give both meanings, as well as some others not relevant here. To support it, plaintiff sends a number of volleys over the net; defendant essays to return them and adds a few serves of its own. Assuming that both parties were acting in good faith, the case nicely illustrates Holmes' remark “that the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs—not on the parties' having meant the same thing but on their having said the same thing.” I have concluded that plaintiff has not sustained its burden of persuasion that the contract used “chicken” in the narrower sense.
Id. (citation omitted). Upon learning of the court's decision, the plaintiff undoubtedly clucked “FOWL.”
37 was the age of the detective who arrested Clarence Earl Gideon when he testified at Gideon's retrial. Gideon had secured a retrial by successfully arguing to the U.S. Supreme Court that, as an indigent, he had a constitutional right to representation by counsel. See Anthony Lewis, Gideon's Trumpet 233 (1966). In Gideon v. Wainwright, 372 U.S. 335, 345 (1963), the Warren Court established the right of indigent defendants to the appointment of counsel in both federal and state prosecutions. The Court generously referred to members of the legal profession in this instance as “necessities, not luxuries.” Id. at 344.
In need of further tax numbers? Check out the new "Taxpayer Recepit" program from the White House, an idea that was articulated by Ethan Porter and David Kendall.
[image: Arabic numerals via]