#### C. F. HOVEY COMPANY, A CORPORATION, v. THE UNITED STATES

[No. J-673.

Decided June 3, 1935.

Findings of fact amended, with supplemental opinion, April 6, 1936.]

*Mr. William P. Smith*for the-plaintiff.

*Mrs. Elizabeth B.*Demis, with whom was *Mr. Assistcmt Attorney General Franh J.*Wideincm, for the defendant.

*525Geeen, Judge,

delivered the opinion of the court:

This is a suit for refund of income and excess-profits tax paid for the fiscal years ending January 31, 1918, 1919, and 1920. Claims for refund were filed February 1, 1924, for each of these years alleging in substance, among. other things, that the Commissioner had failed, to properly compute plaintiff’s invested capital in that plaintiff was not allowed anything for goodwill and also that its capital had been improperly reduced by excessive deductions for depreciation. On May 24, 1924, plaintiff filed an appeal' to the Commissioner on the various points of its tax liability for the years 1917 to 1920, inclusive, in- which the plaintiff stated that it withdrew all points at issue except that of goodwill. On December 6, 1924, the Commissioner rejected plaintiff’s claim for refund for 1919, and on May 13, 1925, by a statement in a so-called sixty-dáy deficiency letter plaintiff’s claims for refund for the other years in' controversy were rejected. On July 11, 1925,. plaintiff- filed an appeal with the Board of Tax Appeals from the Commissioner’s decision rejecting the claims .for refund, alleging that the Commissioner erred in his computation of invested capital by refusing to allow any value for goodwill; and on June 22, 1926, the Board held that the plaintiff was entitled to have the amount of $200,000 included in its invested capital for goodwill paid in for stock. As a result of the decision of the Board of Tax Appeals, the Commissioner made changes in the amount of invested capital of plaintiff as theretofore fixed by him and for each of the fiscal years *5261918, 1919, and 1920, included in bis calculation the item of $200,000 for goodwill. Having recomputed the taxes of these years on this basis, the Commissioner signed certificates of ovefassessment for each of the fiscal years 1918, 1919, and 1920. On February 24, 1927, the Commissioner signed a schedule of refunds and credits in which the amounts of the overassessments with interest thereon were listed as refundable. The amount so listed with interest was subsequently paid to plaintiff.

The petition in this case was filed December 11,1928, which is more than two years after plaintiff’s claims for refund were definitely rejected and more than five years after any of the taxes in suit were paid. It is therefore contended by defendant that plaintiff’s action is barred. The plaintiff contends, on the other hand, that when in 1927, as a result of the decision of the Board of Tax Appeals, the Commissioner made a certificate of overassessment for each of the years in controversy, the refund claims were reopened and reconsidered, and that consequently the plaintiff’s action was begun in time.

We have heretofore held that where an application for reconsideration is pending and the Commissioner makes a partial allowance in the ascertainment of which he necessarily reviews the whole claim, this constitutes a reconsideration of the claim for refund. But in the case now before us there was no application for reconsideration pending as plaintiff had. specifically withdrawn all objections against the taxes assessed except as involved in the value of the goodwill which it claimed should have been included in its invested capital and as to which it had taken an appeal to the Board of Tax Appeals. What the Commissioner did was not a reconsideration of the claim for refund, it was merely a compliance with the decision of the Board of Tax Appeals and a correction of the error which he had made in computing plaintiff’s tax. The correction was not the result of any reconsideration, it was merely a mathematical computation in accordance with the decision of the Board and we do not think it constituted a reopening of the claim.

Nor do we think it constituted a second rejection of any part of the claim. In the case of *American Safety Razor Corp.*v. *United States,*79 C. Cls. 141, the plaintiff had filed a'claim for tefund which had béén rejected. Thereupon it *527filed an application to reopen the claim and took an appeal to the Board of Tax Appeals. The Board of Tax Appeals decided in plaintiff’s favor, and after its decision the Commissioner took action which the court found to‘.be in effect a reconsideration of the whole claim and-alió wéd the'claim in part in accordance with the decision of the Board. In the case last cited we held that the statute of limitations did. not begin to run until the claim was rejected on reconsideration. It will be observed that this decision was based on the facts in the case which were quite different from those in the case at bar. Whether there is a reconsideration and a second rejection of the claim must depend on the circumstances of the case. Cf. *Mutual Chemical Co.*v. *United States, 78*C. Cls. 664. In the instant case we do not think the facts' found show any reconsideration and conclude that plaintiff’s case is barred by the statute of limitations.

What we have said above makes it unnecessary for us to pass on the contention of defendant that plaintiff has failed to show by a preponderance of the evidence that the Commissioner made any excessive deductions from invested capital for depreciation in computing the taxes for the years involved:

It follows that plaintiff’s petition must be dismissed, and it is so ordered.

Whaley, *Judge;*Williams, *Judge;*Littletojst, *Judge;*and Booth, *Chief Justice,*concur:

SUPPLEMENTAL OPINION ON MOTION FOR NEW TRIAL

Green, Judge,

delivered the opinion of the court:

Plaintiff having filed a second motion for new trial from which it appears that notwithstanding the amendments made to the findings they are still not sufficiently definite, -the court has ordered that the former order amending the findings and the supplemental opinion heretofore filed be set aside and withdrawn and in lieu thereof an amendment be made to the findings as specified in the new order. This has made it necessary that a new supplemental opinion on the case should be filed which recapitulates the essential facts in the case and is as follows:

In the original opinion it was shown that the petition in this case was filed December 11, 1928, and it was said that this was more than two years after plaintiff’s claims for re*528fund were definitely rejected. In the motion for new trial it is argued that this conclusion is erroneous. The findings show that the last claims for refund were filed by plaintiff on February 1, 1924, that they applied to the years 1918, 1919, and 1920, and that one of - the separate and distinct items of plaintiff’s claims was that the Commissioner had erred in failing to include in its invested capital the value of goodwill paid in for stock. Plaintiff’s claim was rejected as to 1919 on December 6, 1924. On May 24,1924, the plaintiff filed what is designated as an appeal to the Commissioner on its tax liability for the years 1911 to 1920, inclusive, in which it stated that it withdrew all points at issue except that of goodwill. On May 13, 1925, the Commissioner mailed to plaintiff a sixty-day deficiency letter which fixed and determined the amount of plaintiff’s liability for taxes for the years 1911 to 1920, inclusive, and again stated that plaintiff’s claims, for refund for the years 1918,1919, and 1920 “will be rejected.” The letter also showed that goodwill amounting to-.$200,000 had been disallowed for invested capital purposes for the years 1917 to 1920; inclusive. From this decision of the Commissioner, on July 11,1925, the plaintiff filed an appeal with the Board of Tax Appeals alleging that the Commissioner erred in his computation of invested capital by refusing to allow any -value of the goodwill paid in for stock. The Board of Tax Appeals in a decision dated June 22,1926, held that plaintiff was entitled to have the amount of $200,000 included in its invested capital for goodwill paid in for stock. On December 11, 1926, the Commissioner recomputed plaintiff’s taxes in accordance with tlie decision of the Board of Tax Appeals and having found and fixed an over assessment, made a refund to plaintiff which also was in accord with the decision of the Bo.ard of Tax Appeals. In so- doing, the Commissioner made no changes in his former decision with reference to net income or depreciation, or in any other respect except as to the matter reviewed by the Board of Tax Appeals. ■ In the original opinion, we held- that what the Commissioner' did was not a reconsideration of the claims for refund but was merely a compliance with the decision of the Board of Tax Appeals and a correction (which the law required him to make) of the error he had made' in computing plaintiff’s tax. In so doing he- simply made a- recompu-tation: of plaintiff’s taxes-which resulted in the allowance of *529one item of plaintiff’s- claims in accordance .with the decision of the Board. The fact that the Commissioner made a note of this correction on the original claims for refund only-shows that he was keeping his records in order. The other items of the claims were not considered or even mentioned and there was no occasion for their consideration. The plaintiff had previously filed a statement that it withdrew all points at issue except that of goodwill and no application for reconsideration was then on file.

The application for reconsideration was not filed until February 7, 1927, and it was denied on September 6, 1927. It sets out particularly plaintiff’s claim, as applications for reconsideration usually do, but this did not make it a new claim for refund.

As before stated, the findings show that plaintiff’s claims which were filed February 1, 1924, included the items on account of which a refund is now sought. These claims were definitely rejected and the tax liability of plaintiff determined on May 13, 1925. The suit therefore was not begun until more than two years after the rejection of the claims and more than five years after the payment of the taxes for which suit is now brought. The language of the statute providing that suit must be brought “within two years after the disallowance of the part of the claim to which such suit or proceeding relates” shows how closely the facts of the case fit into the requirements of the statute.

What was said in the case of *Pratt & Whitney Co.*v. *United*States, 80 C. Cls. 676, cited on behalf of plaintiff, has application to the peculiar facts in that case which were altogether different from those in the case at bar. In that case the Commissioner, after considering the claim for refund for the first and only time, computed plaintiff’s tax, found that an overpayment had been made, credited part of the overpayment on other taxes and refunded the balance to' plaintiff. This we held constituted a rejection of the part of the claim for refund which was not paid. Obviously in that case the overassessment could not be determined without considering the whole of the claim. In the case now before us the Board of Tax Appeals determined the overassessment and the Commissioner made a correction accordingly. His former ruling stood as made except as to the matter corrected.

*530The former order amending the findings having been set aside, a new order will be entered amending'the findings so as to change the date December 27, 1933, in Finding V to December *27,*1923; also, • striking out the first sentence of Finding XI and inserting in lieu thereof the following:

> On December 11,1926, the Commissioner of Internal Revenue 'recomputed the taxes 'of plaintiff for the fiscal years 1918, 1919, and 1920 in accordance with the decision of the Board of Tax Appeals and fixed an overassessment for these years in the respective amounts of $4,848.06, $196.92, and $75.86.

The first motion of plaintiff for a new trial and motion for leave to file a second motion for new trial must be overruled.

Whaley, *Judge;*Williams, *Judge;*LittletoN, *Judge;*and Booth, *Chief Justice,*concur.