*1 v. COMMIS- COTTAGE SAVINGS ASSOCIATION INTERNAL REVENUE SIONER OF April 17, January Argued 1991 Decided No. 89-1965. *2 Rehnquist, Court, opinion the in which Marshall, J., delivered Souter, O’Connor, Scalia, Kennedy, JJ., Stevens, J., and C. White, J., opinion, in Blackmun, J., dissenting which joined. filed a joined, post, p. 568. petitioner. argued With the cause for
Dennis L. Manes M. was Slovin. him on the briefs Scott argued Acting the cause for re- Roberts Solicitor General Attorney spondent. Assistant him on the brief were With Deputy Wallace, Peterson, General Solicitor General Clif- R. Farber, and Bruce Ellisen. Sloan, *3 M. Richard ford opinion of the delivered Court. Marshall Justice a institution real- this is whether financial case issue exchanges it its interests losses when izes tax-deductible mortgage group loans for another lender’s of residential one group mortgage residential loans. in a different give rise transaction does to realized hold that such a We losses.
I Cottage Savings (Cottage Savings) Association Petitioner (S L) regulated formerly savings & a and loan association (FHLBB).1 by Loan Bank Board Like Home Federal long-term, many Cottage held numerous L’s, S & mortgages in value when interest declined low-interest surged institutions would late 1970’s. These rates selling mortgages in from their devalued benefited have However, were losses. to realize tax-deductible order by accounting regulations, doing FHLBB so deterred required on books. them to record the losses their which 1 FHLBB in 1989. 401 the Financial Congress abolished 1989, Reform, Recovery, Act of Pub. L. and Enforcement Institutions 101-73, 103 354. Stat.
557 Reporting these losses consistent with the then-effective accounting regulations placed many FHLBB would have by S & L’s risk of closure the FHLBB. responded by relaxing
The FHLBB to this situation its requirements reporting regulatory for the of losses. In a directive R-49,” known as “Memorandum dated June 27, report FHLBB 1980, the determined that L’s S & need not mortgages losses associated with that are “substantially mortgages by identical” held other lenders.2 acknowledged purpose The FHLBB’s for Memorandum R-49 generate was to facilitate transactions that would tax losses substantially but that would not affect the economic transacting S & L’s. typical This case involves Memorandum R-49 transac- Cottage Savings tion. On December sold “90% participation mortgages interests” four S & L’s. It simultaneously purchased “90% interests” mortgages All held these S & L’s.3 of the loans in- classifying Memorandum R-49 listed 10 criteria for mortgages sub stantially identical.
“The loans involved must: single-family mortgages,
“1. involve residential (e. type “2. g., conventionals), be similar conventionals for (e. maturity g., “3. have years), the same stated terms *4 rates, “4. have identical stated interest (i. e., seasoning remaining “5. have similar maturity), terms to aggregate principal “6. have amounts within the lesser of 272% or minus) $100,000 (plus transaction, on both sides of the any with addi- paid cash, being tional consideration recourse,
“7. sold be without values,
“8. have similar fair market “9. sale, have similar loan-to-value ratios at the reciprocal time the and security “10. have all for both sides of the transaction the Record,
same state.” Exh. 72-BT. 3By participation exchanging merely interests rather than the loans themselves, party each its relationship retained with the individual obli- Consequently, gors. each S & L continued to service the loans on which it 558 by single-family were secured the transaction
volved The fair market area. value homes, most the Cincinnati by interests each side participation the package of the par- million. face value was approximately $4.5 in the Savings Cottage relinquished interests ticipation 90 T. C. million. See $6.9 transaction was approximately (1988). 372, 378-382 Cottage Savings tax return, 1980 federal income
On its ad- the which $2,447,091, represented claimed a deduction value the face difference between justed of the par- fair market value that it traded and the interests As Memo- permitted by it interests that received. ticipation not these losses to did R-49, Cottage Savings report randum the Commissioner Internal Revenue the FHLBB. After deduction, Cottage claimed Sav- Savings’ Cottage disallowed Tax in the Tax Court. The a redetermination ings sought T. C. See 90 permissible. Court held that the deduction was (1988). 372 re- Commissioner, Appeals Court of
On appeal 1989). (CA6 F. The Court of Appeals 890 2d 848 versed. that Cottage the Tax Court’s determination with agreed the transaction. through had realized its losses held id., Cottage Savings the court However, at 852. its losses were not a deduction because was not entitled to tax year 1980 for purposes sustained “actually” during 165(a). 2d, F. 855. C. See 890 U. S. issue to the S L in- of this & Because importance the Circuits over whether among conflict dustry deductible tax produce R-49 exchanges Memorandum (1990). certiorari. U. S. 808 We we losses,4 granted now reverse. monthly payments participation made
had
transferred
(1988).
90 T. C.
participation-interest
holders. See
Appeals
have
the tax treat
considered
The two other Courts
have
ment
transactions
found that
transac
of Memorandum R-49
Mortgage
See Federal Nat.
Assn.
give
tions do
rise to
losses.
deductible
*5
t-H\—t
Rather
than
tax
on
assessing
liability
the basis of annual
in
fluctuations
the value of a
Inter-
taxpayer’s
the
property,
nal Revenue Code defers the tax
of a
or
consequences
gain
in
loss
value until the
property
taxpayer “realizes” the gain
1001(a)
or
The
§
loss.
realization
is
requirement
of
implicit
Code,
1001(a),
§
the
C.
which
U. S.
defines
gain
“[t]he
[or
from the
or other
sale
of
dif-
disposition
property”
loss]
ference between “the amount realized” from the sale or dis-
and its
basis.” As
property
“adjusted
this
has
concept
Court
of realization
recognized,
is “founded
Horst,
on
Helvering
administrative
convenience.”
v.
(1940).
112,
U.
an appreciation-based
S.
Under
system
taxation,
and the Commissioner would
taxpayers
have
“cumbersome, abrasive,
undertake the
and unpredictable ad-
assets
ministrative
task”
on an
valuing
annual basis to
determine whether the
had appreciated
assets
or depreciated
1See B. Bittker
L. Lokken,
value.
&
Federal
Taxation
(2d
1989).
Income,
¶5.2,
Estates and Gifts
5-16
In
p.
ed.
contrast,
the form or
of an
change
“[a]
extent
investment
detected
a
or an
easily
taxpayer
administrative officer.”
(rev.
1945).
R.
Taxable Income 79
ed.
Magill,
1001(a)’s
Section
a
language provides
straightforward test
for realization:
to realize a
loss in
the value of prop-
must
a “sale
erty,
taxpayer
or other
engage
disposition
The
property.”
parties agree that
exchange
[the]
cannot
this case
be characterized as
§
under
1001(a);
“sale”
the issue before us is
whether
a “disposition
transaction constitutes
property.”
Commissioner
that an
argues
exchange
can be
as a
if
treated
under
“disposition”
proper-
ties
are
different. The
Commissioner
that,
further
submits
because
underlying mortgages
Commissioner,
App.
v.
283 U. S.
D. C.
896 F. 2d
583-584
Commissioner,
(CA5
San Antonio
Assn. (1990);
560 participation essentially substitutes, the economic were by Cottage Savings exchanged were not interests received from the other S & L’s. Cot- from those different any tage Savings, hand, maintains that ex- the other on property” “disposition change property under is a exchanged property §1001(a), regardless the is of whether Alternatively, Cottage Savings materially different. con- exchanged materi- were tends that the underlying ally loans were secured different because properties. different prin- realization must therefore determine whether
We 1001(a) § incorporates ciple difference” re- a “material quirement. what must further decide that does, If it we applies requirement it this case. We to and how amounts questions in turn. consider
A history language of the Code indicates Neither the nor exchanged property must differ extent whether and to what 1001(a). § property” “disposition under to count as a readily agree with the Commissioner that Nonetheless, we gives exchange property a realization rise to event an 1001(a) § if the are “materi- under by regula- ally himself has different.” Commissioner 1001(a) embody § material difference tion construed requirement: provided
“Except . . . the or as otherwise loss property cash, into realized from conversion property exchange other differ- ing materially extent, either in kind or in is treated as § Reg. 1.1001-1, Treas. income or as loss sustained.” added). (1990) § (emphasis 1.1001-1 CFR Congress delegated to the has Commissioner Because regulations promulgate power “all needful rules and [the Code],” Internal Revenue for the enforcement interpre- §7805(a), regulatory his we must defer to U. S. C. tations of the Code so are long reasonable, see National Inc. Assn., Dealers Muffler (1979). S. 476-477 U. 1.1001-1 that §
We conclude Treasury Regulation a rea- 1001(a). sonable § interpretation of first Congress employed 1001(a) § language now comprises Code of the Revenue Act of ch. 234, 43 Stat. 253; has language remained essentially unchanged vari- through *7 ous reenactments.5 1934, And since the Commissioner has construed the term in- statutory “disposition to property” clude “material difference” As we have requirement.6 “ recognized, and ‘Treasury regulations interpretations long continued without change, substantial applying to un- amended or statutes, reenacted substantially are to deemed have received congressional approval and have the effect of law.’” United Correll, States v. 389 299, U. S. 305-306 Helvering v. Winmill, 305 U. (1967), quoting 79, S. 83 (1938).
Treasury Regulation §1.001-1 also consistent with our landmark precedents on In a realization. series of de- early cisions involving tax effects of this property exchanges, Court made clear that a taxpayer realizes taxable income
5 202(a) provided: Section of the 1924 Act “Except section, as provided hereinafter gain this from the or sale disposition property other be shall the excess of the amount realized (a) (b) provided therefrom over the 204, basis in subdivision or of section and the loss be shall excess such basis over the amount realized.” provision 111(a) § The essence of this was reenacted of Revenue Act of 111(a) 1934, 277, 703; eh. § 48 Stat. then in and Internal Revenue 1939, 1, 37; 1001(a) § Code ch. 53 finally Stat. of the Internal 1954, 591, Revenue Code of Pub. L. 68A Stat. 295. 6 § What is Reg. now Treas. 1.1001-1 originated 86, Reg. Treas. Art. promulgated which pursuant was to the Revenue ofAct 1934. That regulation provided: “Except as provided, otherwise the Act regards as or income as loss sus- tained, cash, or loss from property realized the conversion of into exchange other property differing materially added). either in kind (emphasis or in extent”
562 if the are or “essen “materially” Phellis, See United States v. different. 257 U. S. tially” Stearn, Weiss v. 265 253-254 156, (1921); 242, U. S. Marr v. 536, 268 U. S. 540-542 (1924); (1925); Eisner (1920) Macomber, 252 U. S. 189, see also v. 207-212 realization Because (recognizing these deci requirement). sions were of the context” which part “contemporary legal see Cannon v. Act, enacted of the 1924 Congress 698-699 University Chicago, 677, (1979), U. S. because has left undisturbed Congress through subsequent reenactments of the of realization estab principles Code cases, we in may presume Congress lished these see Pierce v. §in 1001(a), these codify principles tended Underwood, Pons, Lorillard (1988); 487 U. S. (1978). 580-581 The Commissioner’s U. S. construction statutory language incorporate cer principles was reasonable. tainly
B *8 a Precisely what constitutes “material difference” for pur- 1001(a) §of of the Code is a more poses complicated question. The Commissioner that are dif- argues “materially if in ferent” differ economic substance. To deter- mine whether the in this in “materially sense, case were different” this the Commis- sioner we should the attitudes argues, look to of the parties, the evaluation of the interests the secondary mortgage market, and the views the FHLBB. We conclude that 1001(a) § a much less demanding embodies less complex test. whether § the contains a question
Unlike material of what constitutes difference the requirement, question a material difference is not one on which we can defer to the Commissioner. For the Commissioner has not issued an authoritative, of what prelitigation interpretation satisfy requirement.7 give meaning exchanges Thus, this to test, difference we must look to to the material the case law Congress the test derives and which we from which believe codify enacting reenacting language intended the 1001(a). comprises supra, that See Lorillard v. Pons, now at 580-581. with
We start the classic treatment of realization in Eisner supra. taxpayer Macomber, In Macomber, v. owned who company of stock in a 2,200 1,100 shares received another company part pro rata from of a stock dividend shares company’s growth in reflect the At meant to value. issue was the stock dividend constituted whether taxable income. not, We that it did because no was held realized. See merely stock id., at 207-212. We reasoned dividend taxpayer’s reflected the increased worth see stock, id., taxpayer at 211-212, realizes and that a increased worth of property only by receiving “something exchangeable value proceeding property,” id., see 207. — subsequent In three Phellis, decisions United States v. supra; supra; v. Weiss and Marr v. United Stearn, supra conception refined Macomber*s realization — we property exchanges. the context of payer In each case, the tax appreciated stock
owned that had value ac- since its 7In FSB, its brief United States Centennial Bank No. 89- two Rulings support posi the United States cites Revenue mortgages exchanged through reciprocal mortgage tion that sales are not different. Brief for (citing United States n. 21 Rev. 85-125, 180; Rul. 1985-2 Cum. Bull. Rev. Rui. 1981-2 Cum. Bull. 157). Perhaps Rulings postdate reciprocal because the two Revenue mortgage exchange purport at issue and do not transaction here define materially” Treasury Regulation §1.1001-1, language “differ argued rulings has not that the taken in Commissioner is en *9 g., Assn., Compare, titled to e. deference. National Dealers Inc. Muffler (1979) States, (deferring v. United 440 U. nn. 16-19 S. to position in longstanding Rulings consistently reflected series of Revenue variety patterns). adhering generally same in a fact (1965) Tallman, (agency’s interpre Udall v. 16-17 U. S. reasonable deference). regulations tation of own is entitled to its corporation in which the quisition. case, the in each And corporation, reorganized taxpayer into a new had held stock assuming corporation of the old the business the new with corporations Marr corporation. in Phellis and While Jersey corporations, the changed to Delaware New from both corporations original incor- in both were Weiss and successor following reorganization, porated case, in In each Ohio. corporation in the received shares of the old the stockholders proportional corporation equal old in the their interest new corporation. taxpayers question re- in these cases was whether in the old cor- in their shares the accumulated
alized poration stock in return for those shares when received equivalent proportional representing interest in the new an corporations. trans- Marr, we held that the In Phellis and that because events. We reasoned actions were realization rights company incorporated in one State has “different incorporated powers” State, the tax- in a different from one through acquired payers the transactions in Phellis and Marr they pre- “materially from what different” that was viously S., 169-173; Phellis, had. States v. U. United (using phrase supra, at 540-542 States, Marr v. United see different”). “essentially no re- contrast, In we held that By exchanging in in stock alization occurred Weiss. corporation newly reorganized predecessor in for stock thing really taxpayer corporation, did not receive “a Steam, he had.” Weiss v. from what theretofore different explained supra, determination Marr, at 254. As we our “really company reorganized dif- Weiss was not that the predecessor turned on the fact that both com- ferent” from its incorporated panies Marr v. the same State. See were (outlining supra, distinction be- at 540-542 cases). tween
Obviously, Marr that made the distinction Phellis and corporations successor different the stock predecessors in the was minimal. Taken to- the stock *10 gether, principle Phellis, Mart, and stand for the Weiss properties are “different” in the sense that is “material” to long respective pos the Internal Revenue Code so as their enjoy legal sessors entitlements that are different kind or separate groups extent. Thus, of stock are not they proportional if different confer “the same interest of the corporation.” same character the same Marr v. United they materially States, S., 268 U. at However, 540. are dif they corporations, if ferent are issued different id., at 541; supra, United States v. or if Phellis, confer “dif rights powers” ferent] corporation, in the same Marr v. supra, demanding at 541. more No a stand necessary satisfy ard than this is in order to the adminis purposes underlying requirement trative the realization 1001(a). Helvering Horst, 311 U. atS., For, 116. long property as the entitlements are not identical, their exchange will allow both Commissioner and the trans acting taxpayer easily appreciated depreciated fix or values of the relative to their tax bases. support
In contrast, we find no for the Commissioner’s conception “economicsubstitute” of material difference. Ac- cording properties to the Commissioner, differences between purposes are material for of the Code when it can be said (in parties, that the the relevant market this case the second- (in market), ary mortgage regulatory body and the relevant FHLBB) case the this would consider them material. Noth- ing suggests exchanges in Phellis, Weiss, and Marr satisfy subjective trigger must such a test to real- of a ization loss. complexity approach
Moreover, the of the Commissioner’s goal ill serves the of administrative convenience that under- requirement. apply lies the realization In order to the Com- principled missioner’s in a fashion, test the Commissioner and taxpayer identify must the relevant market, establish regulatory agency whether there is a whose views should be taken into and then account, assess how the relevant market agency
participants would view the transaction. and the explain inquiries how these failure The Commissioner’s question calls into the workabil- *11 be conducted further should ity of his test. incompatible
Finally, test is with the the Commissioner’s 1001(c) provides Title 26 of the Section of Code. structure § recog- gain under “shall be a or loss realized that nonrecognition provisions unless one the Code’s nized” of recog- provision nonrecognition applies. withholds such One exchange proper- gain from an of a realized nition of loss appear economic under the to be substitutes ties that would provision, This difference test. material Commissioner’s commonly exception, kind” withholds rec- known the “like as exchange prop- ognition “on realized of a or loss productive erty in a or for use trade or business held property of like kind which is to be . . for held investment. productive trade or in a business or for invest- either for use 1031(a)(1). expected § Congress If had 26 U. S. C. ment.” exchanges would not count as real- that similar 1001(a), § it would under have had no reason ization events recognition gain or loss a realized to bar transactions.
C 1001(a), interpretation exchange prop- an Under our erty gives long a event so as the rise to realization “materially long properties are different”—that so is, embody legally Cottage Savings’ entitlements. distinct easily satisfy this test. transactions issue here Because by exchanged Cottage Savings interests & L’s from loans that were made to dif- the other S derived by obligors homes, different the ex- ferent and secured embody legally changed interests did distinct entitlements. Cottage Consequently, we realized its conclude exchange. point losses at the it anomalous to The Commissioner contends is treat mortgages “substantially deemed identical” to be “materially anomaly, FHLBB as different.” The however, merely mortgages substantially semantic; can be identical purposes for Memorandum R-49 and still exhibit “differ- purposes ences” that are “material” for of the Internal Reve- Cottage Savings nue Code. Because received entitlements gave up, exchange put different from those it both Cot- tage Savings the Commissioner to deter- change Cottage mine Savings’ mortgages the value of relative to their tax bases. there Thus, is no reason not exchange treat the of these as a realization event, regardless mortgages status of under the criteria Memorandum R-49.
Ill Although Appeals Cottage Savings’ the Court of found that *12 ground losses were realized, it disallowed them on the 165(a) § they were not under sustained of the Code, 165(a). § U. C.S. Section states a deduction “any during shall be loss allowed for sustained the taxable year compensated by and not for insurance or otherwise.” § interpretation 165(a), Under the Commissioner’s of 165(a), “To a be allowable as deduction under section a by completed loss must be evidenced closed and transac- by except tions, events, fixed identifiable and, as other- 165(h) provided relating wise and section §1.165-11, actually during to disaster sustained losses, the taxable year. Only a bona fide loss is allowable. Substance govern determining not form mere shall a deductible §1.165-l(b), §1.165-l(b) Reg. loss.” Treas. 26 CFR (1990).
The a Commissioner offers minimal defense Court Appeals’ conclusion. The Commissioner contends that the losses were not sustained because lacked “economicsub- stance,” which the Commissioner seems to mean that the say losses were not bona fide. We “seems” because the Commissioner states the in one sentence a foot- explanation. offering See in his further note brief without only authority Respondent n. 34-35, 39. Brief for argument Higgins is for this v. the Commissioner cites (1939). Brief See States Smith, U. S. 473 p. 11. 16, n. No. taxpayer Higgins, a not sustain loss a did
In held that we corporation by selling he which cost to securities below not were found that the losses sole We was the shareholder. arm’s conducted transaction was not bona fide because the taxpayer length of the retained benefit and because the Hig- wholly corporation. through owned his securities supra, con- gins is no Because there at 475-476. Smith, conducted in this case were not tention that transactions Cottage Savings length, retained de at arm’s or that facto ownership four it to the traded inapposite. reciprocating Higgins is In view of L’s, S & any arguments in failure to advance other Commissioner’s support Appeals’ ruling respect with of the Court Cottage 165(a), purposes § case, this that, for we conclude 165(a). meaning within the sustained its losses I—I judgment above, For the forth the Court reasons set Appeals the case is remanded for further reversed, opinion. proceedings this consistent with
So ordered. *13 joins, with whom Justice Blackmun, White Justice concurring part dissenting part in 89-1926, and No. p. dissenting post, 573, in No. 89-1965. and penalties agree early by I that the withdrawal collected by Bank do not constitute “income Centennial FSB discharge taxpayer,” indebtedness of the reason of ... of 108(a)(1)(1982 ed.), meaning of U. S. C. within penalty amounts are not excludable from that the Centen- join gross III I nial's income. therefore Part Court’s opinion in No. 89-1926.
I dissent, however, from the Court’s conclusions Cottage Savings two cases that Centennial and Association purposes realized deductible income tax losses for when exchanged partial group each in one interests of residential mortgage partial group loans another like mortgage regard of residential I loans. these losses as not recognizable purposes mortgage for income tax because the packages substantially so were identical and were not different. exchanges, acknowledges, as the Court were occa by
sioned Memorandum R-49, Record, Exh. 72-BT, issued
(FHLBB)
by the Federal Home Loan Bank Board
on
June
by
1980, and
that Memorandum’s relaxation of theretofore-
existing accounting regulations
requirements,
a relax
placement
“many
ation effected to avoid
S & L’s at risk of
substantially affecting
closure
the FHLBB” without
transacting
“economic
of the
Ante,
S & L’s.”
557. But the Memorandum, the
notes,
Court
also had as a
purpose
“facilit[ation
generate
of]
transactions that would
surprising
tax
I
losses.” Ibid.
find it somewhat
that an
agency
responsible
presume
not
for tax matters would
to dic
tate what is or is not a deductible loss for federal income
purposes.
thought
something
tax
I had
that that was
within
province
the exclusive
of the Internal
Service,
Revenue
sub
ject
judicial
Certainly,
to administrative and
review.
opinion
respect
FHLBB’s
in this
is entitled to no deference
Stewart,
whatsoever. See United States v.
U. S.
(CA5
(1940);
1982)
Commissioner,
It has been established or loss in the value purposes only is taken into account for incometax if and when the or loss is “realized,” is, when it exchange, is tied ato realization event, such as the sale, disposition property. other Mere variation value— *14 570 not marketplace
the routine and downs ups —do tax This is funda- consequences. themselves have income law. mental income tax
In
to an
requirement
exchange,
the realization
applying
different
in kind
materially
involved must be
1(a),
§1.1001-
26 CFR
in extent.
Treas. Reg.
1.1001—
(1990).
administra
the rule recognized
This has been
Art.
is
86,
1935,
Regs.
at least since
see Treas.
tively
decision.
1934,
judicial
under the Revenue Act of
sued
Commissioner,
g.,
e.
Loan &
Co.
Mutual
v.
See,
States,
Mart v.
United
1950).
(CA5
also
571
interests as
identical.”
“substantially
These factors assure
practical identity; surely,
they then also assure that
dif
any
cannot
ference
be
consequence.
Indeed,
is
nonmateriality
the full
of the
purpose
Memorandum’s criteria.
The “proof
of the
is
pudding”
the fact of its complete accounting
to the
acceptability
Indeed,
FHLBB.
as has been noted, it
is difficult
to reconcile substantial
identity for financial
with a
accounting purposes
material difference for tax ac
See First
Federal
&Loan Assn.
counting purposes.
Temple
(WD
F. Supp. 230, 245
(CA5
Tex. 1988), aff’d,
This should suffice and be the end of the analysis. Other facts, however, the solidify conclusion: The retention transferor of interests, 10% it to on enabling keep servicing its loans; transferor’s to collect continuing the payments due from the borrowers that, so so far as the latter were con- cerned, it was business usual, exactly as it had been; the obvious lack of concern or dependence the transferor with (as the “differences” upon which the Court relies transferees, made no credit taxpayers checks and no appraisals col- (CA6 lateral, see 890 F. 2d 848, 1989)); 90 T. C. 372, 382 (ND (1988); 682 F. Supp. 1988); Tex. the selection of the loans aby computer programmed to match mortgages in accordance with the Memorandum R-49 criteria; the ab- sence of even the names of the borrowers the closing schedules attached to the agreements; Centennial’s receipt loan files six years id., after its exchange, 5;n. the restriction of the interests to State; the same identity the respective face and fair market values; and application by parties common discount factors to each side of the transaction —all reveal that any differences exist made no might difference whatsoever and were not material. This demonstrates the real nature of the transac- tions, including nonmateriality claimed differences. dealing with and not su- here with realities should be
We many times, and as perficial As has been said distinctions. with are be concerned tax law we in income above, noted stray we form. When not with mere substance likely precarious precedent be a principle, the new future. beacon respectfully on this issue. dissent
I