Commissioner of Internal Revenue v. James B. Kelley and Lena S. Kelley, and John Waltman and Doris Waltman

RIVES, Circuit Judge

(dissenting).

Faced with the choice of one of two conflicting meanings of Section 117(m), I would say that “a substantial part” has reference to the part not yet realized. That construction would carry out the overriding legislative purpose, which was to prevent transformation of ordinary income into capital gain. To concur with the majority in this case, I would have to think that Congress did not intend to close a loophole, but intended to close it only a part of the way, and to leave the loophole two-thirds open to taxpayers bent on saving taxes by the use of collapsible corporations. I cannot conceive that, in its enactment of a corrective statute, Congress intended to leave such a gaping loophole. We should adopt a rule of statutory interpretation which strikes more directly at the evil at which Congress aimed. I therefore respectfully dissent.