Court Opinion

ID: 4632396
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:11:42.691357+00
Date Added: 2024-06-11T07:57:53.217969
License: Public Domain

D. E. WHEELER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Wheeler v. CommissionerDocket No. 21093.United States Board of Tax Appeals16 B.T.A. 96; 1929 BTA LEXIS 2640; April 22, 1929, Promulgated *2640  1.  Henry Cappellini et al.,14 B.T.A. 1269">14 B.T.A. 1269, followed.  2.  The time within which an assessment made prior to June 2, 1924, may be collected, is not extended by section 278 of the Revenue Act of 1924.  Russell v. United States,278 U.S. 181">278 U.S. 181. 3.  Where the liability of the taxpayer is extinguished by section 1106(a) of the Revenue Act of 1926, the liability of a transferee under section 280 of the same Act is also extinguished.  William H. Trindle, Esq., for the petitioner.  O. B. Bennett, Esq., for the respondent.  MILLIKEN *96  This proceeding involves the redetermination of the liability under section 280 of the Revenue Act of 1926 of petitioner, as a transferee of the property of the Hamlin-Wheeler Clothing Co., hereafter referred to as the Clothing Company, in the amount of $475.95.  The errors alleged are (1) that section 280 is unconstitutional; (2) the disallowance of adequate salaries to the officers of the Clothing Company; and (3) that the liability of petitioner as stockholder in and transferee of the property of the Clothing Company is barred by the statute of limitations.  The facts were stipulated*2641  and from the stipulation and from the pleadings we make the following findings of fact.  FINDINGS OF FACT.  Petitioner is an individual who resides and has his place of business at McMinnville, Yamhill County, Oreg.  The notice of deficiency from which this appeal is taken was mailed by registered mail to petitioner on September 9, 1926.  The taxes in controversy are income and excess-profits taxes for the fiscal year ended January 31, 1918, in the amount of $475.95, and said taxes in said amount were assessed against the Clothing Company in May, 1924.  The Clothing Company, prior to the 31st day of January, 1918, was a corporation organized under the laws of the State of Oregon, and was engaged in the clothing business at McMinnville, Yamhill County, Oreg., and on April 23, 1918, said corporation was regularly dissolved by the filing of the necessary resolution with the Corporation Commissioner of the State of Oregon, and by receiving a certificate of dissolution from said Corporation Commissioner.  Said Clothing Company, prior to its dissolution, reported to the Commissioner of Internal Revenue on a fiscal year basis, such fiscal *97  year beginning with the first*2642  of February and ending with the 31st of January of the next ensuing year.  For the fiscal year ended January 31, 1918, the said company filed a return on Form 1031, on April 13, 1918, under the provisions of the Revenue Act of 1916, as amended by the Revenue Act of 1917, showing a tax liability of $560.69, and thereafter on July 12, 1919, filed a supplemental return on Form 1120, as required by the Revenue Act of 1918, showing a further tax liability of $26.30.  Later the Commissioner determined the said deficiency of $475.95, as shown by said deficiency letter, under the provisions of section 205 of the Revenue Act of 1918.  Upon the dissolution of the Clothing Company on January 31, 1918, the petitioner, who owned 50 per cent of the stock of said company, received as liquidating dividends an undivided one-half interest in kind in the stock of clothing and assets of the corporation, which stock and assets were at that time of a value of at least $3,000.  No part of said taxes assessed in May, 1924, in the sum of $475.95, has been paid.  OPINION.  MILLIKEN: Petitioner's first contention to the effect that section 280 of the Revenue Act of 1926 is unconstitutional is foreclosed*2643  by our decision in , where we held that transferees who take advantage of section 280 by appealing to the Board can not question its validity in such proceedings.  The second contention has been abandoned.  The third contention involves the application of the statute of limitations.  The five-year period within which the deficiency assessed against the Clothing Company could have been collected (section 250(d) of the Revenue Act of 1918 and of the Revenue Act of 1921, and section 277 (a)(3) of the Revenue Act of 1924) began to run from July 12, 1919, the date on which the Clothing Company filed its second return, and expired on July 12, 1924.  ; ; . Respondent assessed the deficiency against the Clothing Company in May, 1924.  Since the assessment was made prior to the approval of the Revenue Act of 1924 (June 2, 1924), section 278 of that Act does not serve to extend the time within which the assessment may be collected.  *2644 . Not only was the collection of the deficiency barred on September 9, 1926, when respondent sought to determine the liability of petitioner, but the liability of the Clothing Company was extinguished by section 1106(a) of the Revenue Act of 1926.  The repeal of section 1106(a) by section 612 of the Revenue Act of 1928 did not revive the liability.  *98 ; ; and . Under these circumstances, the liability of petitioner as transferee was also barred and extinguished, . Judgment will be entered for the petitioner.