Court Opinion

ID: 4632093
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:11:03.646202+00
Date Added: 2024-06-11T07:57:50.117593
License: Public Domain

AMERICAN FEATURE FILM CO., AND METRO PICTURES CORPORATION OF NEW ENGLAND, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.American Feature Film Co. v. CommissionerDocket No. 4437.United States Board of Tax Appeals11 B.T.A. 1271; 1928 BTA LEXIS 3649; May 10, 1928, Promulgated *3649  1.  A written consent signed by the president of a corporation to a later determination, assessment, and collection of such tax as may be determined to be due operates to suspend the running of the statute of limitations notwithstanding the board of directors of the corporation did not specifically authorize the execution of such consent.  2.  The evidence is insufficient to show that certain stock acquired by one of the petitioners for its stock had a cash value of $95,000.  3.  Earnings available for the payment of dividends within the year should not be reduced by a tentative tax computed upon the income for the entire year prorated to the date of the dividend payments.  Charles D. Hamel, Esq., and Lee I. Park, Esq., for the petitioners.  A. R. Marrs, Esq., for the respondent.  LITTLETON*1271  Petitioners were affiliated during the taxable years involved in this proceeding.  The Commissioner made jeopardy assessments in respect of the tax of the American Feature Film Co., hereinafter referred to as the American Company, for 1917 and 1918, and in his statutory notice of determination upon abatement claims determined that an additional*3650  tax of $6,092.71 should be assessed for 1917, and that there has been an overassessment of $553.49 for 1918.  He made a jeopardy assessment in respect of the tax of the Metro Pictures Corporation of New England, hereinafter referred to as the Metro Corporation, for 1917, and in the notice of his determination upon an abatement claim in respect thereof held that an additional tax of $2,091.48 should be assessed for this year.  No deficiency was determined in respect of the tax of the Metro Corporation for the year 1918.  The Commissioner made a determination for 1919 and found that there had been a consolidated net loss for that year.  The issues urged at the hearing are (1) whether assessment and collection of additional tax claimed for 1917 and 1918 are barred by the statute of limitations; (2) whether certain salaries and legal expenses were proper deductions for 1917 and 1918; (3) whether stock of a certain corporation acquired by the Metro Corporation for its stock in 1917 had a cash value of $95,000; (4) whether current earnings available for the payment of dividends should be reduced by a tentative tax computed upon the earnings for the entire year prorated to the date of the*3651  dividend payments.  *1272  Petitioners claim in respect of error (3) that the stock acquired by the Metro Corporation for its stock had a cash value at the time of $95,000 and that this stock became worthless in 1919.  The Board is asked to determine the cash value of the stock at the time acquired for invested capital purposes, and to determine that the stock became worthless in 1919 for the purpose of fixing the amount of the net loss in 1919 which may be deductible from gross income for 1918.  FINDINGS OF FACT.  For the taxable years involved petitioners were affiliated Massachusetts corporations with office at Boston.  They employed the accrual method of accounting.  The original income and profits-tax returns for 1917 of the American Company were filed April 9, 1918, and showed a total tax of $5,075.41 which was paid.  The original consolidated income and profits-tax return of petitioners for 1918 was filed September 6, 1919, on which a consolidated net loss was shown.  April 23, 1923, the Commissioner assessed against the American Company an additional tax of $7,615.96 for 1917 and $3,022.03 for 1918.  The original return for 1917 of the Metro Corporation was filed*3652  April 9, 1918, and showed a net loss for the year.  August 16, 1923, the Commissioner assessed against this corporation an additional tax of $10,336.87 for 1917.  The Metro Corporation was dissolved in April, 1923.  The following written consents were executed in respect of the American Company: FEBRUARY 16, 1923.  In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, American Feature Film Company of Boston, Massachusetts, and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, *1273  and collection of the amount of income-excess-profits, or war-profits taxes due under any return made by or on behalf of the said American Feature Film Co., for the year 1917 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide Revenue, equalize duties, and encourage the industries of the United States, and for other purposes", approved August 5, 1909, irrespective of any period of limitations.  [SEAL.] AMERICAN FEATURE FILM COMPANY, SAMUEL BISCHOFF, Taxpayer, Clerk.D. H. BLAIR, Commissioner.JANUARY*3653  21ST, 1924.  In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, American Feature Film Co., of Boston, Mass., and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said American Feature Film Co. for the years 1917 and 1918, under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes", approved August 5, 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation provided for the purposes hereinabove mentioned.  [SEAL.] AMERICAN FEATURE FILM CO., By HARRY ASHER, Pres., Taxpayer.D. H. BLAIR, Commissioner.JAN. 21, 1924.  In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, American Feature Film Co. of*3654  Boston, Mass., and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said American Feature Film Co. for the years 1917-1918 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes", approved August 5, 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by any waivers already on file with the Bureau, within which assessments of taxes may be made for the year or years mentioned.  [SEAL.] AMERICAN FEATURE FILM CO., BY HARRY ASHER, Pres., Taxpayer.D. H. BLAIR, Commissioner.DECEMBER 23, 1924.  In pursuance of the provisions of existing Internal Revenue Laws, American Reature Film Company, a taxpayer, of Boston, Mass. and the*3655  Commissioner of Internal Revenue, hereby consent to extend the period prescribed by law for a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the years 1917-1918-1919 under the Revenue Acts of 1924, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes", approved August 5, 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the *1274  statutory period of limitation within which assessments of taxes may be made for the year or years mentioned, or the statutory period of limitation as extended by Section 277(b) of the Revenue Act of 1924, or by any waivers already on file with the Bureau.  AMERICAN FEATURE FILM COMPANY, BY HARRY ASHER, Taxpayer,D. H. BLAIR, Commissioner.The deficiency notice upon which this proceeding is predicated was mailed to petitioners March 26, 1925, and the*3656  petition was filed May 25, 1925.  December 8, 1925, the American Company by Harry Asher, president, and the Metro Corporation by Edw. A. Golden, president, and the Commissioner entered into the following written consent: In pursuance of the provisions of existing Internal Revenue Laws American Feature Film Company & Metro Pictures Corp. of New England, a taxpayer, of Boston, Massachusetts, and the Commissioner of Internal Revenue hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year (or years) 1917, 1918 and 1919 under existing revenue acts, or under prior revenue acts.  This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1926, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between*3657  the date of mailing of said notice of deficiency and the date of final decision by said Board.  [PAPER SEAL.] (No corporate seal available.) METRO PICTURES CORP. OF N. E. BY EDW. A. GOLDEN.  AMERICAN FEATURE FILM COMPANY, BY HARRY ASHUR, Pres. [SEAL.] D. H. BLAIR, Commissioner.The following written consents were executed in respect of the Metro Corporation: FEBRUARY 16, 1923.  In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Metro Picture Corporation of New England of Boston, Massachusetts, and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said Metro Picture Corporation for the year 1917 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and *1275  encourage the industries of the United States, and for other purposes", approved August 5, 1909, irrespective of any period of limitations.  [PAPER SEAL.] METRO*3658  PICTURE CORPORATION OF NEW ENGLAND, SAMUEL BISCHOFF, Attorney, Taxpayer.D. H. BLAIR, Commissioner.JANUARY 22, 1924.  In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Metro Picture Corp. of New England of Boston, Mass., and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said Metro Picture Corp. of New England for the years 1917 and 1918 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes", approved August 5, 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation provided for the purposes hereinabove mentioned.  METRO PICTURE CORP. OF NEW ENGLAND, EDW. A. GOLDEN, Pres.D. H. BLAIR, Commissioner.Corporate seal*3659  affixed.  DECEMBER 23, 1924.  In pursuance of the provisions of existing Internal Revenue Laws, Metro Pictures Corporation of New England, a taxpayer, of Boston, Mass., and the Commissioner of Internal Revenue, hereby consent to extend the period prescribed by law for a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the years 1917-1918-1919 under the Revenue Act of 1924, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties and encourage the industries of the United States, and for other purposes," approved August 5, 1909.  This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation within which assessments of taxes may be made for the year or years mentioned, or the statutory period of limitation as extended by Section 277(b) of the Revenue Act of 1924, or by any waivers already on file with the Bureau.  METRO PICTURES CORPORATION OF NEW ENGLAND *3660  By EDW. A. GOLDEN D. H. BLAIR, Commissioner.Seal not available.  *1276  In July, 1922, the American Company by its president, Harry Asher, and Samuel Bischoff, secretary, and the Metro Corporation by its president, Edw. A. Golden, and Albert Ginsberg, secretary, each executed a power of attorney to Albert Flower to act for it in all matters relating to its Federal tax liability.  These powers of attorney were filed with the Commissioner of Internal Revenue.  The original petition instituting this proceeding before the Board asking for a redetermination of the deficiencies determined by the Commissioner was signed by Albert Flower as attorney for the petitioners.  The petition was sworn to by Harry Asher as president of the American Company, and by Edw. A. Golden as president of the Metro Corporation.  Golden made oath to the petition as follows: Edward A. Golden, being duly sworn, says that he was President of the Metro Pictures Corporation of New England, one of the taxpayers named in the foregoing petition and as such President is duly authorized to verify the foregoing petition.  That he has read the said petition or had the same read to him and is familiar*3661  with the statements therein contained and that the facts therein stated are true, except such facts as are stated to be upon information and belief and those facts he believes to be true.  EDW. A. GOLDEN.  Sworn to before me this second day of May, 1925.  BENJAMIN SCHWALB, Notary Public.July 27, 1923, petitioners in connection with the prosecution of their tax case before the Bureau of Internal Revenue prepared and filed an appeal with the Commissioner of Internal Revenue signed and sworn to by the American Company, Harry Asher, president, and by the Metro Corporation, Edw. A. Golden, president.  This appeal was also sworn to by Louis Rosenberg, an officer and director of these two corporations.  For the calendar year 1917 the American Company accrued on December 31 salaries to its treasurer and assistant treasurer in the amount of $2,500 each, and similarly accrued to each as salaries the same amount for the year 1918.  In December, 1917, the Metro Corporation accrued as salaries to its treasurer and assistant treasurer $3,750 each for the year 1917, and similarly accrued a like amount to each as salaries for the year 1918.  These salaries were for necessary services*3662  actually rendered by these officers in carrying on the business of the companies, were reasonable and were duly authorized by the board of directors of each of the corporations within the taxable year.  December 31, 1917, the American Company incurred an expense for legal services to its counsel in the amount of $7,500 and for the year 1918 for similar services the amount of $5,000, which amounts were ordinary and necessary expenses of carrying on the business.  *1277  In December, 1917, the Metro Corporation incurred and accrued $1,500 for 1917 and $3,000 for 1918 for legal services of its counsel rendered in connection with the carrying on of its business.  The Commissioner disallowed the deductions of the salaries and legal fees.  December 29, 1916, Louis B. Mayer, acting on behalf of himself and other stockholders of the Metro Corporation, subscribed for $10,000 par value of capital stock of the Bluebird Photoplays of New England, Inc., a Massachusetts corporation, having a capital stock of $20,000 par value.  Mayer agreed to pay and did pay $10,000 in cash for this stock and also agreed "that he would advance to the corporation from time to time for a period of six*3663  months from this date such sums as this corporation may need in the conduct of its business, to wit, such sums as may be needed weekly in the event of the gross income amounting to less than the cost of the prints, plus $500 for weekly expense, but not exceeding $15,000 at any time in the aggregate." The stock was issued to Mayer and his associates in equal proportions February 23, 1917.  This stock was endorsed by the respective holders and delivered to the Metro Pictures Corporation of New England, the stock of which corporation was also held in equal proportions by the same individuals.  In consideration of the transfer of the Bluebird stock to it, the Metro Corporation, on March 3, 1917, increased its capital stock from $5,000 to $100,000 par value and issued the increased stock to the same individuals in equal proportions.  The balance of the stock of the Bluebird Photoplays of New England, Inc., together with the $10,000 cash received, was, pursuant to the contract of December 29, 1916, turned over to the New England Universal Film Exchange in exchange for the franchise agreement which that corporation had with the Bluebird Photoplays of New York.  By this franchise or license*3664  agreement, the Bluebird Photoplays of New England, Inc., acquired for a period of five years from January 4, 1917, the exclusive right or license to exhibit and display throughout the six New England States and to license others to exhibit and display throughout such territory positive prints of motion picture photoplays to be exploited by the Bluebird Photoplays of New York at the rate of one picture per week for said period.  Under this contract for such rights the Bluebird Photoplays of New England, Inc., was required to pay each week $1,000 upon delivery to it of the first positive print of a motion picture photoplay exploited by the Bluebird Photoplays of New York, and $200 upon the delivery to it of any additional print of any such motion picture photoplay.  The Bluebird Photoplays of New England, Inc., was termed the licensee and as such was to pay to the Bluebird Photoplays of New York, the licensor: *1278  A sum equal to fifty per cent (50%) of all moneys received by the licensee from the exhibition and display or the licensing of the right to exhibit and display positive prints of motion picture photoplays exploited by the licensor now in the possession of or to be*3665  delivered to the licensee under the terms hereof, over and above the cost of positive prints as hereinbefore in this paragraph provided, and the sum of Eight Hundred Dollars ($800.00) to be allowed as weekly office expenses.  In the event such moneys fail to aggregate the price to be paid for positive prints as hereinbefore in this paragraph provided in any one week, such payments of sum equal to fifty per cent (50%) shall be postponed until such deficits have been made up.  The licensor agreed that it would not, during the period specified, authorize others to exploit and display a positive print of a motion-picture photoplay exploited by the licensor or to be exploited and delivered to the licensee under the terms of the license agreement.  The pictures to be exploited were known as "Bluebird" pictures.  By such agreements, the Bluebird Photoplays of New England, Inc., became the sole licensee for the distribution of Bluebird pictures in the six New England States for a period of five years.  January 4, 1917, a contract was entered into between the American Feature Film Co., one of the petitioners herein, and the Bluebird Photoplays of New England, Inc., whereby the formed agreer*3666  to act as the distributing agency for the latter for $500 a week.  The Bluebird Photoplays of New England, Inc., had no assets other than its franchise.  It had no salaried officers or employees and had practically little or no expense, except the $500 it had to pay the American Feature Film Co. under its contract of January 4, 1917.  The Bluebird Photoplays of New England, Inc., was dissolved by an Act of the Senate and House of Representatives of the Commonwealth of Massachusetts March 29, 1920, and its stock became worthless at that time.  The "Bluebird" brand of pictures compared favorably with those exploited by other picture concerns, whose pictures in the New England territory earned a gross return of from $5,000 to $10,000 per picture, during its life.  The evidence does not disclose what, if anything, was actually realized from any of the "Bluebird" pictures handled by the Bluebird Photoplays of New England, Inc.  At the time the Metro Pictures Corporation of New England acquired one-half the capital stock of the Bluebird Photoplays of New England, Inc., it increased its own capital stock from $5,000 to $100,000 March 3, 1917.  For the year 1917 the American Company*3667  declared and paid dividends as follows: March 31$8,000April 304,000June 308,000July 314,000August 31$4,000September 304,000October 314,000*1279  In determining the amount of current earnings available at the dividend dates, the Commissioner accrued a tentative tax of $31,551.66 for the year and reduced the earnings available on the dividend dates by the amount of this tentative tax prorated.  OPINION.  LITTLETON: It is claimed by petitioners that assessment and collection of any additional tax are barred by the statute of limitations for the reason that the several written consents were invalid.  It is argued that the written consents for a later determination, assessment, and collection of the tax here involved are invalid because the directors did not specifically authorize the execution thereof and because the person who signed the first consents on behalf of the petitioners was not an officer of either corporation.  It is further argued that the consents executed in 1924 on behalf of the Metro Corporation by its president are invalid because the corporation was dissolved in April, 1923.  Petitioners are endeavoring to take*3668  advantage of their own negligence.  The record discloses that the consents were executed in the manner and form shown by the persons mentioned after consultation with the duly constituted attorney in fact who was specifically authorized and empowered by the petitioners to "do any and all things and to take any and all action in reference to any and all matters relating to taxes with the United States Government or its officials" and that said attorney in fact was granted "full power and authority to act in and concerning the premises as fully and effectually as it [the corporation] might do if personally present and represented by its officers." The attorney in fact was continually engaged in handling the matter of the Federal taxes claimed from the petitioners and the several consents hereinbefore referred to were executed at his instance.  The oral testimony as to what connection Samuel Bischoff, who signed the two consents dated February 16, 1923, had with the petitioners is indefinite and conflicting.  It is claimed that he was not an officer or employee of either corporation, but this is contrary to the weight of evidence.  Written consents relating to the same taxable year*3669  were subsequently, in January, 1924, executed by the president of each corporation, which consents, if otherwise valid, were effective to postpone the bar of the statute.  . Petitioners argue that the consents executed by the president of the petitioners were invalid because there was no specific action by the directors of the corporation authorizing the same, but we think this contention is without merit.  The general rules applicable to the determination of the validity of contracts are not applicable in the determination of the validity of the consent to a later determination, assessment, and collection *1280  of additional tax under the various revenue acts.  We think Congress used the word "consent" advisedly.  To consent implies the idea of acquiescence to a matter of conduct, the assent to the performance of an act or duty in other than the usual or customary manner, or at a time other than that prescribed, and we think a consent to a later determination and assessment of tax of a corporation signed by an officer of the corporation in the regular course of business, although without specific authorization by the board of directors, *3670  is valid and effectual to suspend the operation of the statute of limitation for such period as may be specified therein.  It is well known that in the general conduct of affairs of corporations it is customary for the corporate officers to perform many acts that partake of agreements or consents, as may be for the best interest of the corporation, and it would be unreasonable to suppose that every act of regularly constituted officers of a corporation must have specific approval by vote of the board of directors.  A consent to a determination and assessment of whatever tax may be due by the corporation beyond the period specified in the statute is nothing more than approval by the officer or officers of a corporation of a policy to be pursued in the conduct of affairs of a corporation in respect of such matters or the concurrence or acquiescence by such officer on behalf of the corporation to the performance by the Commissioner at a later date of an act which the statute prescribes shall otherwise be performed by him within a specified time.  There is no element of bargain in the execution of a consent for a later determination and assessment of a tax imposed by Congress.  *3671  In , the Board said: The instrument under consideration is denominated an "income and profits-tax waiver." It is in fact a bilateral undertaking entered into by the parties pursuant to the statute.  Technically, it is not a waiver of the statute, for it is made pursuant to the statute.  It is not an acknowledgment of any existing obligation or a new promise to pay, from which a new cause of action arises, thus beginning anew the period of limitation.  It is not an agreement not to plead the statute of limitations as a defense to any asserted tax liability.  In short, it is not something to be considered as in avoidance of the statute.  By the statute and by its terms, it operates to extend the time.  A consent to such later determination, assessment, and collection primarily benefits the taxpayer for the reason that when such consent is entered into the taxpayer is given an opportunity to further contest the correctness of the proposed additional tax before being required to pay the same and bring suit for recovery, or prosecute anew its claim before some other tribunal.  We think it would be going beyond the intent of the statute to hold*3672  that a consent by a corporation in order to be valid must have the specific approval of the board of directors.  The fact that the consent to be effective must be in writing and signed by the Commissioner gives it no greater significance *1281  than if the Commissioner were not required to sign it.  Nor does the fact that it must be in writing and signed by the taxpayer and the Commissioner give it all of the essentials of a contract.  A consent is exactly what the word implies - a concurrence, aquiescence.  It is further argued that the consents relating to the Metro Corporation were invalid because they were signed after the corporation had been dissolved.  Edw. A. Golden had for several years been president of this corporation and was such officer at the date of dissolution.  Since dissolution Golden has continued to act for the corporation in the settlement of its affairs.  The petition of this corporation filed with this Board was signed and sworn to by Golden as president of the corporation.  The Act of the Senate and House of Representatives of the Commonwealth of Massachusetts in General Court assembled April 4, 1923, dissolving this corporation, provided: SECTION*3673  2.  Nothing in this act shall be construed to affect any suit now pending by or against any corporation mentioned herein, or any suit now pending or hereafter brought for any liability now existing against the stockholders or officers of any such corporation, or to revive any charter previously annulled or any corporation previously dissolved, or to make valid any defective organization of any of the supposed corporations mentioned herein.  SECTION 3.  Suits upon choses in actions arising out of contracts sold or assigned by any corporation dissolved by this act may be brought or prosecuted in the name of the purchaser or assignee.  The fact of sale or assignment and of purchase by the plaintiff shall be set forth in the writ or other process; and the defendant may avail himself of any matter of defence of which he might have availed himself in a suit upon the claim by the corporation, had it not been dissolved by this act.  SECTION 4.  Nothing in this act shall be construed to relieve the last person who was the treasurer or assistant treasurer, or, in their absence or incapacity, who was any other principal officer, of each of the corporations named in this act, from the obligation*3674  to make a tax return as of April first following the date of dissolution and swear to the same as required by section thirty-five of chapter sixty-three of the General Laws.  The tax liability of each of the corporations named in this act shall be determined in accordance with the existing laws of this commonwealth.  SECTION 5.  This act shall take effect as of March thirty-first in the current year.  Section 51, Chapter 155, of the General Laws of Massachusetts, provides as follows: Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three years after the time when it would have been so dissolved for the purpose of prosecuting and defending suits by or against it and of enabling it gradually to settle and close its affairs, to dispose of and convey its property and to divide its capital stock, but not for the purpose of continuing the business for which it was established; provided, that the corporate existence of such a corporation, for the purpose of any suit brought by or against it within*3675  said period of three years, shall continue beyond said period for a further period of sixty days after final judgment in the suit.  *1282  Under this section the officers of the corporation had the same authority after dissolution to act in respect of prosecuting and defending suits by or against the corporation and in settling and closing the affairs of the corporation as before.  We are of opinion also that the proceeding before this Board which was instituted by the filing of the petition May 25, 1925, may be termed a suit within the meaning of this section, and that the adjustment of tax claims against the corporation is a matter incident to closing and settling the affairs of the corporation.  For those reasons, we are of opinion that acts of Golden in respect of verifying the petition and in executing the consents on behalf of the corporation in connection with its pending tax liability for periods prior to dissolution were in all respects valid.  For the reasons given we are of opinion that the claim of petitioners that the consents were invalid and of no effect is without merit.  Petitioners contend that the consents did not operate to extend the period for collection*3676  of the tax beyond April 1, 1926, and that, inasmuch as no collection was made within that time, the unpaid tax is now barred.  This contention is not well taken.  . . The evidence shows that the salaries claimed for 1917 and 1918 for the treasurer and assistant treasurer of each of the petitioners were duly authorized and were accrued expenses for those years.  Also that petitioners incurred legal expenses in 1917 and 1918 as hereinbefore set forth, which amounts were proper deductions from gross income.  The Board is of the opinion that the Commissioner was not in error in denying petitioners' claim that the cash value of stock of the Bluebird Photoplays of New England, Inc., was $95,000 at the time acquired by the Metro Corporation for stock in March, 1917.  Petitioners claim a cash value of $95,000 for this stock at the time acquired and further claim that the stock became worthless and was a loss in 1919.  There is evidence showing the receipts resulting from the exhibition throughout New England of certain pictures similar in character to the Bluebird pictures*3677  and with which the Bluebird pictures might be favorably compared but there is no evidence indicating that any profit was realized by the Bluebird Photoplays of New England, Inc., from exhibiting the Bluebird pictures.  Whatever value the Bluebird stock had was purely speculative.  Some testimony was adduced tending to show the profits that might possibly have been realized had difficulties and litigation not arisen with the Bluebird Photoplays of New York, but so many factors *1283  enter into the successful carrying out of such undertakings, and the lack of sufficient evidence as to the cash value claimed for this stock in March, 1917, is so apparent in this proceeding that the Board can not find that the stock of the Bluebird Photoplays of New England, Inc., at the time acquired in March, 1917, by the Metro Corporation had at that time the cash value claimed.  In computing invested capital for each of the years 1917 and 1918 the current earnings available for the payment of dividends should not be reduced by a tentative tax computed upon the earnings of an entire year prorated.  *3678 ; ; All . Reviewed by the Board.  Judgment will be entered on 15 days' notice, under Rule 50.