Glen Raven Mills, Inc. v. Commissioner , 59 T.C. 1 ( 1972 )

Dawson J.,

concurring: I agree with the result reached in the majority opinion. In the first place, I think the majority’s application of the factors suggested by section. 1.882(a)-l(h) (5) of the regulations is correct. Secondly, I think the result reached is consistent with the line of liberal opinions by this Court. See Goodwyn Crockery Co., 87 T.C. 355, 362 (1961), affd. 315 F.2d 110 (C.A. 6, 1963) (“Under the wording of the section it would seem there could be some changes in the manner of conducting that trade or business and yet the business could remain ‘substantially the same.’ ”); E. F. Ramsey Co., 43 T.C. 500, 514 (1965) (“it would appear that there has to be a real change in the type of business conducted to come within this statute.”); Clarksdale Rubber Co., 45 T.C. 234 (1965), which closely follows the above two cases; Wallace Corp., T.C. Memo. 1964-10, which distinguishes a long line of egregious cases. See also Kolker Bros., Inc., 35 T.C. 299, 304-305 (1960) (decided under sec. 122, I.R.C. 1939); Koppers Co. v. United States, 229 F. Supp 159, 165 (W.D. Pa. 1964) (“Neither the Code, the Eegulations, nor the decisions give the slightest support to the proposition that the business must be carried on in substantially the same manner. The question is whether it is substantially the same business.”). Unlike the dissenters, I would place this case within the precedential orbit of Goodwyn Crockery, far away from cases such as Euclid-Tennessee, Inc., 41 T.C. 752 (1964), affd. 352 F.2d 991 (C.A. 6, 1965) (change from the brewery business to the leasing of property to the heavy equipment business; the "basic character" of the business had changed), and J. G. Dudley Co., 36 T.C. 1122 (1961), affd. 298 F.2d 750 (C.A. 4, 1962) (change from business of hosiery manufacturing to the business of electrical heating, plumbing, and contracting; decided under sec. 122, I.R.C. 1939, following Libson Shops, Inc.).

Finally, I think Congress intended for us to strike a balance between two oft-conflicting goals; one, the curtailment of trafficking in loss corporations and, two, the avoidance of any dampening effects on valid business transactions. Here the majority 'has found no “trafficking.” I would also emphasize the potential “dampening effects.” Because of the high degree of competition and the need for product diversification in the textile business, the key to success seems to be flexibility. The rather narrow, restrictive view expressed in the dissenting opinion would tie the hands of businessmen in this and similar businesses for as much as 2 years. That, in my judgment, would make section 382(a) the instrument of uneven justice. 'See and compare Coast Quality Construction Corp. v. United States, 463 F. 2d 503 (C.A. 5, 1972), a recent opinion which takes a practical and sound approach.

DeeNNEN, Sterrett, and Goefe, JJ., agree with this concurring opinion.