Court Opinion

ID: 4631350
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:09:26.644737+00
Date Added: 2024-06-11T07:59:51.997897
License: Public Domain

APPEAL OF ESTATE OF WARREN H. SIMMONS.Simmons v. CommissionerDocket No. 3885.United States Board of Tax Appeals3 B.T.A. 1360; 1926 BTA LEXIS 2420; April 20, 1926, Decided Submitted March 2, 1926.  *2420 Mark H. Miller, Esq., for the taxpayer.  J. S. Halstead, Esq., for the Commissioner.  *1360  Before ARUNDELL and LANSDON.  The Commissioner has determined a deficiency in estate tax in the amount of $7,425.79.  The petitioner alleges that such deficiency results from an erroneous overvaluation of certain shares of common stock owned by the decedent at the date of his death.  FINDINGS OF FACT.  Warren H. Simmons, the decedent, died testate on April 15, 1922.  Among other assets disposed of by will were 1,731 shares of the common stock of the Bemis Brothers Bag Co. of the par value of $100 per share.  The Bemis Brothers Bag Co. is a corporation engaged in the manufacture of bags from paper, cotton, jute, and other suitable materials.  It has factories located at different points throughout the country.  Its stock is rather closely held and is not listed on any stock exchange.  It made no sales of stock in the year 1921, and, in the same year, only small amounts of the stock were sold by individual owners at prices not disclosed by the record.  During the year 1920 the Bemis Brothers Bag Co. sustained losses in the operation of its business in the amount*2421  of $23.34 for each share of outstanding common stock, and, in 1921, it earned a profit of $5.27 per share on such stock.  It paid no dividends in 1921 and a 2 per cent dividend on January 31, 1922.  Its balance sheet at December 31, 1921, was as follows: Assets.Current:Cash$2,203,243.94Notes and accounts receivable3,029,389.88Inventories10,640,630.92Stocks and bonds of other companies48,658.63Cash and advances to affiliated companies19,396.12Fixed:Land and buildings6,544,106.38Machinery and tools3,210,785.79Miscellaneous:Unexpired insurance and other prepaid items244,875.52Total25,941,087.18Liabilities.Current:Notes payable$1,181,062.50Accounts payable83,230.42Due to stockholders and employees638,387.30Reserves for taxes226,459.38Reserve pension fund21,071.96Three-year notes650,000.00Fixed:Common stock11,085,000.00Preferred stock1,954,900.00Surplus10,100,975.62Total25,941,087.18*1361  The common stock of the Bemis Brothers Bag Co. had a fair market value of $150 a share at April 15, 1922.  Order of redetermination will be entered on 15 days' notice, under*2422  Rule 50.