Court Opinion

ID: 4625875
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:58:03.763963+00
Date Added: 2024-06-11T07:56:47.076373
License: Public Domain

ROBERT C. ROGERS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Rogers v. CommissionerDocket Nos. 13581, 24740.United States Board of Tax Appeals12 B.T.A. 816; 1928 BTA LEXIS 3450; June 25, 1928, Promulgated *3450  1.  The corporation, Robert C. Rogers Co., Inc., was not engaged in business after July 31, 1919, when the petitioner took over its assets, and he is not liable under section 280 of the Revenue Act of 1926 as the transferee of the assets of the corporation for taxes asserted against it by the respondent for the calendar year 1919, and the period January 1, to August 18, 1920.  2.  Petitioner did not receive a liquidating dividend from said corporation in the calendar year 1920.  J. Marvin Haynes, Esq., C. J. McGuire, Esq., and Robert H. Montgomery, Esq., for the petitioner.  Clark T. Brown, Esq., for the respondent.  MARQUETTE *816  These proceedings, which were duly consolidated for hearing and decision, are for the redetermination of deficiencies in income and profits taxes in the amount of $1,581.78 for the calendar year 1919, $2,341.02 for the period January 1 to August 18, 1920, and $14,066.18 for the calendar year 1920.  The deficiencies for the calendar year 1919 and the period January 1 to August 18, 1920, have been asserted against the petitioner under section 280 of the Revenue Act of 1926 as the transferee of the assets of the*3451  Robert C. Rogers Co., Inc.  The deficiency for the calendar year 1920 is asserted as the individual liability of the petitioner.  FINDINGS OF FACT.  The Robert C. Rogers Co., Inc., a corporation, was organized in the year 1914 under the laws of the District of Columbia, with a capital stock of $15,000, divided into 150 shares of the par value of $100 each.  All of the capital stock, with the exception of two qualifying shares, was owned and held by the petitioner.  Formal meetings of the stockholders and directors were held from time to time up to and including a meeting of the stockholders held on November 2, 1918.  No formal meeting of the stockholders or directors was ever held subsequent to that date, but an informal meeting of the stockholders was held on July 31, 1919.  Some time in July, 1919, the petitioner decided he would prefer to transact business as an individual rather than under corporate law.  He accordingly advised the holders of the two qualifying shares of the corporation's capital stock to that effect, and at an *817  informal meeting of the stockholders held on July 31, 1919, they transferred to the petitioner their shares, with the understanding that*3452  he would take over the assets of the corporation and thereafter conduct the business as an individual.  On the same day the assets of the corporation were transferred to the petitioner on the books of the corporation and the books closed as of that date.  On August 1, 1919, new books were opened by the petitioner under the heading "Robert C. Rogers, trading as The Robert C. Rogers Company." Notices were sent by the petitioner to the creditors of the corporation, to its bank, and to the collector at Baltimore, that on and after August 1, 1919, the petitioner would conduct the business in his individual capacity under the name "The Robert C. Rogers Company." On August 31, 1919, an income and profits-tax return for the period January 1 to July 31, 1919, was filed by the corporation.  The corporation, the Robert C. Rogers Co., Inc., has never been formally dissolved, but it has not been engaged in business since July 31, 1919.  The petitioner, from August 1, 1919, to August 18, 1920, carried on in his individual capacity the business taken over by him on July 31, 1919, from the Robert C. Rogers Co., Inc.  On the latter date he transferred the assets of the business to a partnership composed*3453  of himself and one Fischer.  The respondent has determined that the Robert C. Rogers Co., Inc., was engaged in business until August 18, 1920; that on that date the petitioner became the owner of its assets and received thereby a liquidating dividend of $56,091.09, and that there is tax due from the corporation for the year 1919 and for the period January 1 to August 18, 1920, for which the petitioner, as the transferee of the corporate assets, is liable.  OPINION.  MARQUETTE: Regardless of the lack of formality attending the transfer of the assets of the Robert C. Rogers Co., Inc., to the petitioner on July 31, 1919, the action was, in our opinion, clearly sufficient to vest in the petitioner title to such assets subject to the corporation's debts, and the corporation from that date was only an empty shell.  It had no assets and engaged in no business.  It follows that the corporation had no income during the periods August 1 to December 31, 1919, and January 1 to August 18, 1920, and that the petitioner did not receive any liquidating dividends from the corporation in 1920.  Judgment will be entered under Rule 50.