Court Opinion

ID: 4622080
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:48:37.381403+00
Date Added: 2024-06-11T07:56:07.771526
License: Public Domain

OLD DOMINION STEAMSHIP CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Old Dominion Steamship Co. v. CommissionerDocket No. 24462.United States Board of Tax Appeals16 B.T.A. 264; 1929 BTA LEXIS 2610; April 29, 1929, Promulgated *2610  COMPENSATION OF STEAMSHIP COMPANY DURING PERIOD OF FEDERAL CONTROL. - The reasonable compensation of a steamship company, for the use of its properties during the period of Federal control, awarded to a taxpayer keeping its accounts on the accrual basis, was income for each of the accounting periods for which the compensation was allowed, although not received until a later date.  George E. Cleary, Esq., for the petitioner.  R. W. Wilson, Esq., for the respondent.  MURDOCK *265  In this proceeding the Commissioner's determination of a deficiency in income and profits taxes in the amount of $99,123.02 for the calendar year 1921 is contested.  The sole question involved is whether or not there should be included in the petitioner's net income the sum of $409,067.92 awarded to the petitioner under an agreement made with the Director General of Railroads in September, 1921, as just compensation to which the petitioner was entitled in addition to the so-called standard return for the possession, use and control by the Government of the petitioner's system of coastwise transportation between January 1, 1918, and March 1, 1920, under authority of the*2611  Federal Control of Transportation Acts.  The facts are not in dispute.  FINDINGS OF FACT.  The petitioner is a corporation organized and existing under the laws of the State of Delaware and has its principal office at Pier 25, North River, New York, N.Y.  It was the owner of a system of coastwise transportation and engaged in general transportation.  On December 28, 1917, over 50 per cent of its capital stock was owned by railroads.  On December 28, 1917, the control and operation of the petitioner's system was taken over by the Federal Government, pursuant to a Presidential Proclamation dated December 26, 1917, issued under authority of an Act of Congress.  The standard return of the petitioner, as certified to the President by the Interstate Commerce Commission, was $226,841.72 per annum.  Thus for each of the years 1918 and 1919 the standard per annum return was $226,841.72 and for the period January and February, 1920, was $37,181.17, and the total standard return for the period of Government control was $490,870.61.  Prior to September 20, 1921, the petitioner made no agreement with the Government as to the just compensation it should receive for the use and control by the*2612  Government of the petitioner's system of coastwise transportation during the period of Federal control.  On or about September 20, 1921, the petitioner entered into an agreement and final settlement of accounts with the Director General of Railroads under which agreement there was paid to the petitioner the sum of $900,000, and the petitioner's total compensation for the period of Government control was fixed at $899,938.53.  The respondent in determining his deficiency included in the petitioner's income for the calendar year 1921 the sum of $409,067.92, which represented the difference between the total compensation awarded to the petitioner during the period of control and the standard return for the same period.  The taxpayer kept its accounts on an accrual basis.  *266  OPINION.  MURDOCK: The petitioner alleges that the sum of $900,000 was paid to it as total compensation for the use and control of a system of coastwise transportation during the period of Government control under United States Railroad Administration.  It also alleged that the total compensation for the period was fixed at $889,938.53, which was corrected on the record to read $899,938.53.  These figures*2613  are not controverted.  The small discrepancy between the amount alleged to have been apid and the amount at which the compensation was fixed, is not explained in the record.  The facts in this case are similar to those in several prior cases which we have had occasion to decide and the principles of which we consider controlling here.  In view of our prior decisions we find that there is no deficiency for the year 1921.  ; ; ; ; . Judgment will be entered for the petitioner.