Court Opinion

ID: 4605798
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:37:08.164381+00
Date Added: 2024-06-11T07:53:15.823006
License: Public Domain

LEE H. MARSHALL HEIRS, ET AL., FIDELITY TRUST COMPANY, TRUSTEE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Marshall v. CommissionerDocket No. 88838.United States Board of Tax Appeals39 B.T.A. 101; 1939 BTA LEXIS 1069; January 17, 1939, Promulgated *1069  1.  On the facts, held that during the years 1932, 1933, and 1934 petitioner was an association taxable as a corporation.  2.  For each of the taxable years petitioner filed a fiduciary return on form 1041, and each of the beneficiaries included in his individual return his distributive share of the net income.  Held, (1) that such fiduciary return was an information return and not a return of the tax within the meaning of subdivision (c) of section 275, Revenue Act of 1932; (2) that subdivision (c) provides an exception to the general rule stated in subdivision (a) of the same section; and (3) that assessment and collection of the taxes due from petitioner for the years 1932 and 1933 are not barred by limitations.  Charles Denby, Jr., Esq., for the petitioner.  Loren P. Oakes, Esq., for the respondent.  HILL *101  Respondent determined deficiencies in income and excess profits taxes alleged to be due from petitioner as follows: YearIncome taxExcess profits taxTotal1932$3,343.00None$3,343.0019331,467.36$533.582,000.9419341,333.59484.941,818.53Total6,143.951,018.527,162.47*1070  The issues are (1) whether or not petitioner, during the years 1932, 1933, and 1934, was an association taxable as a corporation; and (2) whether assessment and collection of any tax due for the years 1932 and 1933 are barred by limitations.  *102  FINDINGS OF FACT.  The Fidelity Trust Co. (formerly Fidelity Title & Trust Co.) was during the taxable years trustee under a certain deed of trust made November 30, 1925, between Margaret Marshall Hamilton and Charles L. Hamilton, her husband; Vardy Marshall Morris and Frederick S. Morris, her husband; Elizabeth Marshall Rowe and William L. Rowe, her husband; and Lee H. Marshall and Helen L. Marshall, his wife; all of the city of Pittsburgh, Pennsylvania, parties of the first part, and the Fidelity Title & Trust Co., a Pennsylvania corporation, trustee, party of the second part.  The trust was to continue during the life of the longest living of the eight named beneficiaries, but in no event beyond April 30, 1968.  The instrument provided that the parties of the first part reserved unto themselves, their heirs, and assigns, the right to revoke the instrument at any time, by and with the consent of a majority in interest; and*1071  further provided that the guardian of any minor should have the same power in voting for revocation, or as to any other right reserved by the grantors, as though such minor were of age and acting for himself.  The instrument was revoked and the trust terminated in August 1936.  The eight beneficiaries were the four children of George V. Marshall and Emma L. Marshall, and their respective spouses.  The eight beneficiaries were all of age on November 30, 1925.  The trust deed conveyed to the trustee, its successors and assigns, in trust a tract of land known as the "Marshall land", described therein by metes and bounds, and provided in respect of the powers and duties of the trustee as follows: 1.  To hold, manage and control the said premises and property herein conveyed and transferred to the said Trustee.  2.  To lease and rent the said premises or any part thereof, and to collect, receive, sue for and recover the said rents, issues and profits therefrom.  Such lease or leases, however, shall be made only by and with the consent of the majority in interest of the parties of the first part, their heirs and assigns.  In the event that a majority in interest cannot agree on the*1072  terms of such lease, the Trustee may, if in its judgment such action is necessary, make a lease of the premises for a term not exceeding three years, without such consent or approval of a majority in interest.  3.  To oversee the payment of taxes, municipal assessments and insurance, and the interest on any mortgage or other lien upon the said premises, and to obtain statements thereof or bills therefor as soon as the said charges are due and payable; to make such payment on account of the principal of any mortgage or other lien against the premises, as may be agreed upon in writing by the holder of such mortgage or lien and a majority in interest of the parties of the first part, their heirs and assigns; and for that purpose to withhold from the income derived from the premises such amounts as may from time to time be agreed upon by a majority in interest of the parties of the first part, their heirs and assigns; to contract for the repair and general *103  upkeep of the said premises and to incur all reasonable and necessary indebtedness incident to the management of said premises, including the execution of this trust; to pay out of and from the income, rents, issues and*1073  profits arising or accruing from said premises insofar as they are sufficient therefor, all interest charges, costs, charges and expenses, taxes and assessments incurred hereunder or charged or assessed upon said premises, including commissions or expenses of sale or sales, and to pay to the parties of the first part, their heirs, executors, administrators and assigns, as their interest may appear, the net income arising therefrom after the payment of the aforesaid deductions.  4.  To sell at public or private sale the whole or any part or parts of the said premises, and to make, execute and deliver to the purchaser or purchasers thereof good and sufficient deeds therefor; to employ an agent for the sale of said premises and to pay such agent the usual and customary commission for such services; to collect and receive the proceeds of the sale or sales of said properties; such sale or sales, however, shall be made only by and with the consent in writing, and at the direction of the majority in interest of the parties of the first part, their heirs and assigns.  5.  To make and deliver a note or notes to secure funds to make payment on account of principal or interest of any mortgage*1074  or lien on the premises, or for any other purpose for the protection of the interest of the parties of the first part in said premises; to execute and deliver bonds and mortgages to secure the same, which mortgages shall be a lien on said premises, in order to refund any mortgage which may now or hereafter be a lien on said property, or to pay for the construction of a building on the premises, or to pay for alterations or improvements thereto; provided, however, that the execution of such notes or bonds and mortgages and such construction, alteration or improvement is approved in writing by a majority in interest of the parties of the first part, their heirs and assigns.  6.  Upon the termination of this trust before the sale of the said premises, the Trustee shall make, execute and deliver to the said parties of the first part, their heirs or assigns, a deed or deeds therefor.  7.  The Trustee shall not be liable beyond the assets in its hands for the payment of taxes, judgments, liens, charges, costs, interest on mortgages or other indebtedness, principal of mortgage or other liens, insurance premiums or other obligations chargeable against the said property or by reason of*1075  the management and care thereof, nor shall it be liable for the deterioration, destruction, loss, injury or damage which may be done or occur to the property and premises hereby conveyed in trust, nor for any foreclosure of any mortgage now or hereafter placed on said property, or for any sale thereof on any execution beyond its power to prevent by the use of the assets arising and accruing and in its hands at the time of such foreclosure or sale.  The only asset of the trust was the tract of land above referred to as the "Marshall land", situated in the city of Pittsburgh.  This land was a portion of a larger tract fronting on Diamond Street, Smithfield Street, and Fifth Avenue.  The entire tract was covered by a building known as the Frank & Seder Department Store.  A portion of the building was sublet to McCrory's 5 & 10?? Store under a lease from Frank & Seder.  The trust estate owned title to the Marshall land and had whatever legal interest in that portion of the building upon the entire tract as resulted from such ownership and from the terms of the several leases hereinafter mentioned.  *104  The leases of the several tracts of land upon which the building was erected*1076  ran to April 30, 1968.  They all provided that the lessee should pay the taxes and water rent and all charges for gas and electricity; that the lessee should keep the premises insured, make all repairs without abatement of rent, and remove all debris from the premises.  The history of the ownership of the Marshall land and of the leases thereon is as follows: The Marshall land was originally acquired on March 31, 1862, by John Marshall and others, partners trading as "Marshall Brothers." Upon the deaths of the various partners their interests passed to their respective heirs.  On March 8, 1911, the then owners, among whom were George V. Marshall, Ella M. Marshall, and Ann Marshall, leased the entire property to J. G. McCrory & Co. for a term expiring March 31, 1921.  The lease provided that the lessee was to remove the existing improvements and erect upon the land a two-story building.  This building was thereafter erected.  In July 1916 J. G. McCrory purchased Ann Marshall's one-sixth undivided interest in the land, as well as her interest under the lease of March 8, 1911.  At the end of the year 1916 the Marshall land was owned as follows: George V. Marshall, one-half undivided*1077  interest, Ella M. Marshall and J. G. McCrory Real Estate Co., each a one-sixth undivided interest, and Theodore R. Marshall, Harry H. Marshall, and Joseph W. Marshall, the remaining one-sixth interest.  At that time there was a building on the adjoining portion of the larger tract, occupied by a department store operated by Jacob H. Frank and Isaac Seder, engaged in business under the name of Frank & Seder.  On January 27, 1917, this building and the building on the Marshall land were destroyed by fire.  Frank & Seder then determined to erect a larger store upon the entire tract, including the Marshall land, and thereupon entered into negotiations with the several property owners, including McCrory & Co. and the Marshall interests.  George V. Marshall declined to lease his interest to Frank & Seder unless some arrangement were made whereby he could acquire title to the three outstanding one-sixth interests in the Marshall land.  To make this possible Frank & Seder obtained an option from Ella M. Marshall to purchase her interest at any time between June 1, 1923, and June 1, 1924, and entered into agreements to purchase the other two one-sixth interests.  One of such other interests*1078  was purchased by Frank & Seder on June 28, 1917, and the other by Frank & Seder, Inc. (which had acquired the business and assets of Frank & Seder in July, 1917), on May 2, 1918.  The negotiations having been completed, George V. Marshall entered into an agreement on May 22, 1917, leasing his one-half interest to Frank & Seder for a period ending April 30, 1938.  This lease provided *105  that the lessee should build upon the leased premises a steel, fireproof building of not less than six stories high, to cost not less than $225,000.  On May 24, 1917, Ella M. Marshall entered into an agreement to lease her one-sixth interest to Frank & Seder upon terms substantially identical with those embodied in the George V. Marshall lease.  Thereupon, the 1911 lease of the Marshall land to J. G. McCrory & Co. was surrendered and canceled.  It appearing that the cost of the new building above mentioned would exceed the original estimate, an agreement was entered into on June 14, 1917, between Frank & Seder and Lee H. Marshall, acting for George V. Marshall under a power of attorney, whereby Lee H. Marshall agreed to advance not more than $50,000 of the excess of the cost over $225,000, *1079 Frank & Seder to pay interest on the amount advanced at the rate of 6 percent to April 30, 1938.  In consideration of this agreement, Frank & Seder assigned to Lee H. Marshall, acting on behalf of George V. Marshall, their options to purchase the three outstanding one-sixth interests in the Marshall land.  In the exercise of one of the options referred to, Lee H. Marshall, acting as trustee for George V. Marshall and his heirs, acquired the McCrory interest from Frank & Seder, Inc., on May 2, 1918, and on the same day leased it to Frank & Seder, Inc., under a lease the terms of which were substantially identical with those of the Ella M. Marshall lease.  On May 6, 1918, George V. Marshall died, leaving his interest in the property to Emma L. Marshall, his wife.  Emma L. Marshall decided to convey her interest in the Marshall land to a corporation.  Accordingly, she caused the Marshall Land Co., a Pennsylvania business corporation, to be incorporated September 1, 1920.  On September 25, 1920, Emma L. Marshall conveyed her one-half interest in the Marshall land to the Marshall Land Co.  On the same day Lee H. Marshall and others conveyed to the corporation the Ann Marshall one-sixth*1080  interest which had been acquired from her by J. G. McCrory, from him by Frank & Seder, and from them by Lee H. Marshall.  The option to purchase the one-sixth interest of Ella M. Marshall, which had been acquired from Frank & Seder pursuant to the agreement of June 14, 1917, was conveyed by Lee H. Marshall to the Marshall And Co. on July 12, 1921.  The option was exercised and the interest acquired by the Marshall Land Co. on February 15, 1924.  On February 20, 1924, the Marshall Land Co. purchased from the National Department Stores, Inc. (which had acquired the business and assets of Frank & Seder, Inc., in December 1923), the one-sixth interest which Frank & Seder had purchased from Theodore R. Marshall and others, and on March 1, 1924, the Marshall Land Co. leased its interest to National Department Stores, Inc., under a lease *106  expiring April 30, 1938.  The terms of this lease were substantially identical with those of the earlier leases.  Early in 1924 the National Department Stores, Inc., desiring to make certain extensions of the building on the tract and desiring to be assured of a long lease, entered into negotiations with the various property owners to obtain*1081  extensions of the several leases, all of which terminated April 30, 1938, to April 30, 1968.  The negotiations for such extensions culminated in an agreement entered into between the Marshall Land Co. and National Department Stores, Inc., under date of April 24, 1924, which provided that, in consideration of an increase in the rent reserved under existing leases, from May 1, 1924, to their expiration on April 30, 1938, and a fixed net rental thereafter (all taxes, insurance, and repairs to be paid by the lessee) the lessor agreed to lease the land to the lessees for thirty years from May 1, 1938.  The lessee had the privilege of adding not more than four stories to the existing building.  In the meantime, on February 28, 1922, Emma L. Marshall divided all of her stock in the Marshall Land Co. among her four children.  After the new lease had been entered into, the shareholders of the Marshall Land Co. determined to dissolve the corporation and convey the property to a trustee.  Accordingly, on November 30, 1925, the Marshall Land Co. conveyed the Marshall land to its four shareholders as tenants in common.  The only other asset of the corporation was $1,401.01 in cash.  Part of this*1082  money was applied in payment of taxes, and the balance was paid to the mortgagee on account of accrued interest on the mortgage.  On the same day the four Marshall children (their respective spouses joining) conveyed the Marshall land to the Fidelity Title & Trust Co. (now Fidelity Trust Co.) as trustee under the deed of trust here in question.  Thereupon, the Marshall Land Co. was dissolved.  When the Marshall land was conveyed to the trustee herein, it was subject to a mortgage which became due in 1927.  The balance then due was paid of from the proceeds of a new mortgage of $200,000 to the Northwestern Mutual Life Insurance Co., dated July 29, 1927, and due July 29, 1942.  Under the terms of this mortgage, interest was payable at the rate of 5 percent and amortization at the rate of $5,000 per annum for the first fourteen years, the balance of $130,000 being due at the end of the fifteenth year.  On March 15, 1933, petitioner filed a fiduciary return of income on form 1041 for the calendar year 1932, showing thereon net income of $24,312.72, and distribution of such amount in equal portions to Lee H. Marshall, Vardy Marshall Morris, Margaret Marshall Hamilton, and Elizabeth*1083  Marshall Rowe.  These beneficiaries reported such distributive *107  shares in their individual income tax returns for the year 1932, and paid the tax shown thereon.  The last date on which any such beneficiary's return was filed was March 15, 1933.  On March 15, 1934, petitioner filed a fiduciary return of income on form 1041, for the calendar year 1933, disclosing net income of $10,671.68 and distribution of such amount in equal portions to the four beneficiaries above named, who reported their distributive shares in their individual income tax returns for the year 1933 and paid the tax shown thereon.  On March 15, 1935, petitioner filed a finduciary return of income for the calendar year 1934, showing net income of $9,698.86, and distribution of such amount equally among the four beneficiaries before named, who reported their distributive shares in their individual income tax returns for 1934 and paid the tax shown thereon.  Petitioner has filed no waiver estending the statute of limitations for assessment and collection of any tax here involved.  The deficiency notice in this proceeding was issued March 13, 1937.  For the purpose of either renting or selling, the*1084  Marshall land was more valuable as unit than if the heirs had endeavored to rent or sell their separate shares.  None of the trust beneficiaries was qualified to manage the property for rental purposes; they had had no such business experience.  The beneficiaries of the trust held meetings or conferences from time to time in their different houses for the purpose of discussing matters relative to the trust.  The tenant of the Marshall land defaulted in the payment of rent in 1932.  Prior to default and for the months of January to August 1932, inclusive, the tenant paid petitioner a rental of $3,166.67 each month.  After default and for the months of September 1932 to February 1933, inclusive, petitioner collected $2,111.11 monthly from the tenant.  For the months of March 1933 to December 1934, inclusive, petitioner collected $1,583.33 per month, or one-half of what had been collected per month prior to the default in 1932.  The leases to the National Department Stores and Frank & Seder provided that upon default in payment of rent the lessor could, upon ten days' notice, eject the tenant.  Upon occurrence of the default in 1932, petitioner did not exercise its option to eject*1085  the National Department Stores, but entered into negotiations with the tenant which continued for about three and a half years, during which time petitioner was receiving the reduced rentals above indicated.  In connection with such negotiations, petitioner incurred unusual expenses and its representative made a number of trips to New York.  These prolonged negotiations culminated in the execution, on or about November 15, 1935, of a new agreement, modifying the existing *108  leases and providing, among other things, for varying monthly rentals during certain periods, and also for rentals during certain other periods to be computed on the basis of a percentage of the tenant's annual gross sales.  The new agreement also provided that the lease, as modified, was to be assigned to a new corporation to be subsequently formed in a reorganization proceeding pending in the District Court of the United States for the District of Delaware.  For the years 1922-1925, inclusive, the Marshall Land Co. filed capital stock tax returns, and in all of such returns, it was stated that the business of the corporation was "real estate." OPINION.  HILL: The first issue for consideration*1086  is whether or not during the years 1932, 1933, and 1934 petitioner was an association taxable as a corporation.  Section 13 of the Revenue Act of 1932 imposes a tax upon the net income of corporations, and in section 1111(a)(2) it defines the term "corporation" as including "associations." Sections 13 and 801(a)(2) of the Revenue Act of 1934 contain similar provisions.  The term "association", as used in the taxing acts, means "a body of persons united without a charter, but upon the methods and forms used by incorporated bodies for the prosecution of some common enterprise." . Again, it has been said that the term "association" implies associates, who enter into a joint enterprise for the transaction of business and sharing of its gains. . Additional characteristics of an "association" are (1) vesting in the trustees of tile to the property embarked in the enterprise; (2) designation of the trustees as a continuing body; (3) centralized management; (4) security of the enterprise from termination or interruption by the death of the owners of the beneficial interest; (5) *1087  transfer of beneficial interests without affecting the continuity of the enterprise; and (6) limitation of personal liability of the participants.  . Petitioner, during the taxable years, we think came clearly within the boundary lines defining an "association" as above indicated.  The four Marshall heirs, who were then the owners, as tenants in common, of the Marshall land, associated themselves together in a joint enterprise for the transaction of business and sharing of its gains.  They transferred to the trustee, its successors and assigns, the property in which each owned an undivided interest, and thereby secured centralized management for their common benefit.  Subject only to the right of revocation by a majority in interest of the grantors, the trust was to continue during the life of the longest living of the *109  grantors, but not beyond April 30, 1968.  Thus, the trust was a "continuing body" and not subject to termination or interruption by the death of the beneficial owners.  Likewise the continuity of the enterprise would not have been affected by the transfer of beneficial interests. *1088  And, lastly, it appears that under the law of Pennsylvania the liability of the beneficiaries was probably limited to the property in the hands of the trustee, even though there was no such specific provision in the trust instrument.  Cf. ; . However, an extended discussion of this point is not deemed necessary, since in our opinion decision of the question presented does not turn upon whether or not there was in fact limitation of personal liability.  In the instant proceeding, as in most cases involving similar questions, there may be present some of the elements both of a trust and an association, but the essence of the issue is whether the paramount purpose of the present trust was the carrying on of a business enterprise for profit and was therefore a business trust or an association as distinguished from what is termed a pure trust.  Cf. . In the case of a pure trust the earning of income is merely incidental.  The main purpose of an association, whether or not it be called a trust, is the earning of profits from the operation of business*1089  venture for the benefit of the joint owners.  As pointed out by the Supreme Court in the Morrissey case, supra:In what are called "business trusts" the object is not to hold and conserve particular property, with incidental powers, as in the traditional type of trusts, but to provide a medium for the conduct of a business and sharing its gains.  Thus a trust may be created as a convenient method by which persons become associated for dealings in real estate, the development of tracts of land, the construction of improvements, and the purchase, management and sale of properties * * * Clearly, the purpose of the present trust was not liquidation, nor was its main purpose the holding and conserving of property.  While the trustee was given authority to sell the property, with the consent of a majority in interest of the beneficiaries, the evidence discloses no intention to liquidate during the existence of the trust, and so far as shown no effort was made in that direction.  Prior to November 30, 1925, the four Marshall heirs were the sole stockholders of the Marshall Land Co., a business corporation which held title to the Marshall land.  On that date the heirs caused the*1090  corporation to transfer to them the title to the land, and on the same date they transferred the title to the trustee, and the corporation was dissolved.  The principal purpose of dissolving the corporation was to avoid corporation taxes.  Apparently, the trustee thereafter merely carried *110  on the prior functions of the corporation in the management and operation of the property and in holding the title thereto.  Obviously, the Marshall land was very valuable property.  Prior to default of the tenant in 1932, rental was paid at the rate of $38,000 per annum.  The trustee was vested with broad powers, essential to the carrying on of a business for profit.  Among other things, the trustee was empowered to hold, manage, and control the property; to lease and rent the premises or any part thereof; to collect, receive, sue for, and recover the rents and profits; to oversee the payment of taxes, municipal assessments, insurance, and interest on mortgages; to make payments on account of the principal of any mortgage, under certain conditions; to contract for the repair and general upkeep keep of the premises, and to incur reasonable and necessary indebtedness incident to the management*1091  thereof; to sell at public or private sale the whole or any part or parts of the property and to make and deliver deeds therefor, with the consent of the majority in interest of the beneficiaries; to borrow money for many purposes, including the construction of building on the premises or to pay for alterations and improvements, with the approval in writing of a majority in interest of the beneficiaries.  The Marshall land was more valuable as a unit for the purpose of selling or renting, and the heirs were not competent, by reason of the lack of business experience, to manage and operate or sell the property themselves.  But that the management and operation of such a property, under the extensive powers vested in the trustee, constituted the carrying on of a business enterprise for profit is too clear, we think, to require further discussion.  Petitioner points to the fact that the tenant paid the taxes, insurance, and other expenses, and contends that during the taxable years the trustee did little more than collect the rent and distribute it among the beneficiaries.  This is not the decisive factor; it is the powers conferred upon the trustee in the trust instrument which determine*1092  the character of the trust rather than the particular activities engaged in during the tax years.  Otherwise it is apparent that the same organization might be classed in one year as a trust and in another as an association taxable as a corporation.  See ; ; . Petitioner cites the decision of the Supreme Court in , and contends it is decisive of the case at bar.  We can not agree.  The facts of the cited case are materially unlike those of the present proceeding.  In the Lewis case, the Court held that, while there were two beneficiaries, one of them was the single grantor and the other, in substance, a mere agent of the *111  grantor and that, hence, there was no association within the meaning of the statute because there were no associates in carrying out the purposes of the trust. Furthermore, there were no factors making the trust analogous to a corporate organization.  The grantor conveyed*1093  certain real estate to the trustee to hold for the benefit of herself and an exclusive sales agent and manager of the trust, concurrently appointed.  The powers and duties of the trustee were purely ministerial.  In order to facilitate the subdivision and sale of the realty, the trustee held the title, executed conveyances upon the agent's direction, and collected and disbursed other than the initial payments.  In its opinion the Court said: If it were not for the declaration of trust, we should have here the simple case of an appointment by a land owner of an agent to subdivide the land and sell it, receiving as compensation for his services a fixed percentage of the payments made by the purchasers.  It is quite evident that such an arrangement has no element of substance or method which would warrant its designation as an association under the statutory provision in question.  Nor can we see that the intervention of trustee to hold title, execute contracts and conveyances at the direction of the real estate agent and make collections alters the situation.  * * * The duties of the trustee were purely ministerial, with no power to control, direct, or participate in, the conduct*1094  of the selling enterprise contemplated by the contract.  On the first issue, respondent's determination is approved.  The second question at issue is whether or not assessment and collection of any tax due from petitioner for the years 1932 and 1933 are barred by limitations.  Section 275 of the Revenue Act of 1932 provides in part pertinent here as follows: (a) GENERAL RULE. - The amount of income taxes imposed by this title shall be assessed within two years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period.  * * * (c) CORPORATION AND SHAREHOLDER. - If a corporation makes no return of the tax imposed by this title, but each of the shareholders includes in his return his distributive share of the net income of the corporation, then the tax of the corporation shall be assessed within four years after the last date on which any such shareholder's return was filed.  The period specified in subdivision (a) under the general rule begins to run from the date the return was filed, whereas the provisions of subdivision (c) are applicable only in a case where the corporation*1095  made no return of the tax imposed by the income tax title.  Petitioner filed a fiduciary return on form 1041 for the taxable year 1932 on March 15, 1933, and a similar return on the same form on March 15, 1934, for the year 1933.  The beneficiaries included their *112  distributive shares of the net income for each year in their respective individual returns and paid the taxes due thereon.  The last date on which any such beneficiary's return was filed for 1932 was March 15, 1933.  Respondent made no adjustment to the net income reported on the fiduciary returns, but computed the deficiencies on the basis of the income so reported.  Thus, it is clear that if the fiduciary's returns were "the returns" required by the statute, the period of limitations provided in section 275(a) has run and the deficiency notice was issued too late.  If the 1041 returns were not returns of the tax, then it seems equally clear that petitioner has made "no return" within the meaning of section 275(c), and the period for assessment and collection of the taxes due for 1932 and 1933 had not expired on March 13, 1937, when the deficiency notice was mailed.  *1096 This same question was considered by the Board in , on facts similar in all material respects to the instant proceeding, and it was there held that the return on form 1041 was a return under the law and served to start the running of the period of limitations provided in section 275(a) of the Revenue Act of 1928, which contains the same provisions as section 275(a) of the 1932 Act.  Respondent filed in that case a petition for review to the United States Circuit Court of Appeals for the Second Circuit, and the court dismissed the petition for lack of jurisdiction, holding that a return on form 1041 was an information return, not a return of the tax, and that it was without jurisdiction to review a decision of the Board in any case where a return of the tax, respecting which the liability arises, had not been made to a collector's office located in its circuit.  See . In discussing the effect of an information return on form 1041, in connection with the question of limitations arising under section 275(c), the court remarked: The truth is that the information return filed by respondent*1097  [taxpayer] was not the return of a tax at all but merely detailed the information with which the tax upon the beneficiaries could be computed.  It is immaterial in this respect that such a return has been held to prevent the imposition of a penalty (citing authorities), or that it contained all the facts by which a computation of the tax could be arrived at.  Section 275(c) is explicit in its reference to the "return of the tax imposed by this title." That means just what it says and may not be extended to include an information return which in fact is no tax return at all.  To the same effect, see also . Upon reconsideration of this question, we conclude that subdivision (c) of section 275, supra, provides an exception to the general rule stated in subdivision (a).  It follows that the provisions of subdivision (a) have no application to a case coming within the purview or *113  subdivision (c).  We hold, therefore, that assessment and collection of the taxes due from petitioner for the years 1932 and 1933 are not barred by limitations.  Reviewed by the Board.  Judgment*1098  will be entered for the respondent.VAN FOSSAN dissents.  LEECHLEECH, dissenting: In the recent cases of City Bank Farmers Trust Co.,39 B.T.A. 29">39 B.T.A. 29, and George Vanderbilt Trust,36 B.T.A. 967">36 B.T.A. 967, the Board, in disallowing deductions of certain items as business expenses, supported that action primarily, if not entirely, on the premise that these trusts were not then in business.  In this proceeding, where neither the actual nor potential activities of the petitioning trust seemed to have been as broad or businesslike, the Board sustains its finding that this trust is taxable as a corporation upon the principal ground that is was in business.  I think the same measure should apply in both situations.  And, having thus restricted the meaning of "business" in the first mentioned class of cases, it should be similarly restricted here.  That, it seems to me, would require a finding that the petitioner was taxable as a trust and not as an association.