United California Bank v. United States

Under the provisions of the Internal Revenue Code of 1954 in effect during the years in question, taxpayers, including decedents’ estates,1 with net long-term capital gains exceeding net short-term capital losses, paid either a “normal” income tax calculated by applying ordinary graduated rates to taxable income computed with a 50% capital-gains deduction permitted by § 1202 of the Code or, if it was a lesser sum, the alternative tax calculated as directed by § 1201 (b).2 Under *183the latter section the taxable income for normal tax purposes was first reduced by the portion of the capital gain…