Court Opinion

ID: 4596452
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:17:09.264171+00
Date Added: 2024-06-11T07:51:37.340895
License: Public Domain

LOWENSTEIN BROTHERS GARMENT CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. 1Lowenstein Bros. Garment Co. v. CommissionerDocket No. 8465.United States Board of Tax Appeals13 B.T.A. 48; 1928 BTA LEXIS 3328; July 24, 1928, Promulgated *3328  1.  The petitioner kept its books on a fiscal year basis, but filed its returns on a calendar year basis.  Held, that the period of limitations for the assessment and collection of the tax did not begin to run until returns had been filed covering the taxable periods involved.  2.  Method of allocating and crediting taxes paid on a calendar year basis to tax liability on a fiscal year basis determined.  A. E. James, Esq., for the petitioner.  J. E. Marshall, Esq., for the respondent.  TRAMMELL*48  This is a proceeding for the redetermination of deficiencies in income and profits taxes for fiscal years ended January 31, 1919, and January 31, 1920, in the amounts of $2,731.04 and $3,559.88, respectively.  By an amendment to the original petition the deficiency for *49  the 11-month period ended December 31, 1920, of $156.12 was eliminated from the issues.  The issues are: (1) Whether the assessment of the asserted deficiences is now barred by the statute of limitations; and (2) whether the Commissioner has correctly credited amounts heretofore paid on the filing of the original returns and additional amounts assessed as deficiencies*3329  prior to the determination of the deficiencies herein involved.  Another issue was raised in the petition to the effect that the Commissioner erroneously computed net income for the fiscal year ended December 31, 1920, by including in the computation thereof an alleged dividend of $3,127.50.  On the latter issue no evidence was introduced and no argument or contention was made in the brief in support thereof and that issue is considered as having been abandoned.  FINDINGS OF FACT.  The petitioner is a Missouri corporation with its principal office at St. Louis.  The petitioner kept its accounts and closed its books in each of the years ended January 31, 1919, and January 31, 1920, on the basis of a fiscal year ending upon those said dates.  On or before March 15, 1919, the petitioner filed a tentative return and an estimate of the corporation income and profits taxes, stating the amount of tax estimated to be due at $877.21 and reporting the amount accompanying said return as $219.30.  On March 15, 1919, the collector of internal revenue assessed against the petitioner on an original list, collector's No. 400,955, the amount of $219.30.  Between May 12, 1919, and June*3330  5 of that year, the petitioner made a complete and final return of income and profits tax on a corporation income and profits-tax return form headed "For Calendar Year 1918 or Fiscal Period Begun January 1, 1918, and ended December 31, 1918." The dates "Jan. 1, 1918," and "Dec. 31" are written in the return with pen and ink.  Following December 31 appears "1918" contained in the regular form.  The said return shows tax paid on filing of tentative return of $219.30, and tax paid on submission of the return of $661.86, a total tax liability of $881.16.  Under date of June 5, 1919, account No. 400,955, the collector charges the petitioner with tax due of $881.16 and credits $219.30 as paid March 15, 1919, and $661.86 as paid June 5, 1919.  The return contains no collector's stamp identifying the date of filing but does contain a notation of the No. 400,955, being the number appearing on the assessment list as the account number of the petitioner, which number corresponds with the number shown on the tentative and final returns of the petitioner.  *50  The final return of the petitioner for the calendar year 1918 was filed on or before June 5, 1919.  On February 24, 1920, the*3331  petitioner filed a complete and final return on the form provided for corporation income and profits tax for the calendar year 1919, or for the period begun January 1, 1919, and ended December 31, 1919.  The dates "Jan. 1, 1919," and "Dec. 31, 1919" are written in at the head of the return in pen and ink.  The amount shown due on the 1919 return is $1,007.79, and this amount was assessed on the March, 1920, list by the collector under account No. 400,473 under date of March 1, 1920.  The return bears cashier's stamp, also dated March 1, 1920.  In addition to the amounts shown to be due on the original returns and paid in connection therewith, as above set forth, of $881.16 and $1,007.79, the respondent in respect of the fiscal period ended January 31, 1919, assessed an additional tax of $263.30, which said tax was thereafter paid, and in respect of the fiscal year ended January 31, 1920, assessed an additional tax of $175.47, which was thereafter paid, making the total tax collected on the return headed "1918" $1,144.46, and on the return headed "1919" $1,192.03, including in the latter amount $8.77 assessed as a penalty in connection with the assessment of $175.47 above set forth. *3332  In the audit of petitioner's tax liability in the deficiency letter of August 29, 1925, the respondent determined tax liability for the month ended January 31, 1918, and credited on account of the payment thereof $1,144.46, being the $881.16 paid by the petitioner on the return headed "1918" and the additional assessment of $263.30 previously by the respondent in respect of the petitioner's tax liability, for the fiscal year ended January 31, 1919.  In the audit of petitioner's tax liability in the deficiency letter of August 29, 1925, the respondent determined tax liability for the fiscal year ended January 31, 1919, and credited on account of the payment thereof $1,183.26, being the $1,007.79 paid by the petitioner on the return headed "1919" and the additional assessment by the respondent in respect of the petitioner's tax liability for the fiscal year ended January 31, 1920.  In the audit of petitioner's tax liability in the said deficiency notice, the respondent determined tax liability for the fiscal year ended January 31, 1920, and gave credit thereon for no previous assessments or payments of tax.  No part of the deficiencies for said years so determined by the respondent*3333  has been assessed.  The respondent determined the tax liability of the petitioner upon a fiscal year basis in accordance with the method adopted by the petitioner of keeping its accounts and closing its books.  The petitioner filed its returns upon a calendar year basis.  *51  OPINION.  TRAMMELL: We think from all the evidence that the respondent properly determined the tax liability of the petitioner on a fiscal year basis.  The returns were filed upon a calendar year basis.  This being true, the first issue presented must be decided adversely to the petitioner on the authority of . The question of the method used by the respondent in crediting amounts paid by the petitioner upon a calendar year basis upon the tax liability shown due upon a fiscal year basis is also controlled by our decision in the case of , and must be decided in favor of the petitioner.  Judgment will be entered under Rule 50.Footnotes1. See p. 446, infra.↩