Court Opinion

ID: 4589682
Source: CourtListenerOpinion
Date Created: 2020-11-20 18:44:46.175235+00
Date Added: 2024-06-11T07:50:19.682502
License: Public Domain

ANNA T. DODGE AND HOWARD B. BLOOMER, EXECUTORS OF THE WILL OF HORACE E. DODGE, DECEASED, AND ANNA T. DODGE, AND JOHN BALLANTINE, TRUSTEES UNDER THE WILL OF HORACE E. DODGE, DECEASED, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Dodge v. CommissionerDocket No. 4641.United States Board of Tax Appeals13 B.T.A. 223; 1928 BTA LEXIS 3293; August 3, 1928, Promulgated *3293  1.  A valuation of stock as of March 1, 1913, made by the Commissioner's predecessor in office at the request of a taxpayer before any sale had been consummated, does not preclude the Commissioner from placing a different valuation on the stock as of that date in determining tax liability resulting from the sale thereof.  James Courzens,11 B.T.A. 1040">11 B.T.A. 1040; Rosetta V. Hauss,12 B.T.A. 755">12 B.T.A. 755. 2.  Upon the authority of the cases cited above, held that shares of stock of the Ford Motor Co. sold by the taxpayer had a fair market value on March 1, 1913, of $10,000 per share.  3.  A waiver of the time prescribed by law for the assessment of Federal income and profits taxes, executed by an administrator pursuant to the provisions of the Federal revenue laws, is not rendered invalid by provisions of state law or the decision of state courts, prohibiting executors or administrators from waiving the running of the statute of limitations as to claims against the estate.  4.  Where the Commissioner, after the enactment of the Revenue Act of 1924, determines a deficiency in taxes imposed by prior Revenue Acts, section 280 of the Act of 1924 requires that the*3294  taxes be assessed and collected in the same manner as taxes imposed by the Act of 1924, and the mailing of a notice of a deficiency pursuant to section 274(a) of that Act, prior to the expiration of the statute of limitations against assessment, operates under section 277(b) to extend the period within which assessment and collection might be made.  5.  In determining whether a contribution by a taxpayer was made within the taxable year the facts, rather than the manner in which the transaction was treated on the taxpayer's books, are controlling.  6.  The act of drawing a check to the order of a charitable organization is nothing more than an attempt to make a gift, and the gift is not completed until the check is paid, accepted, or certified by the bank.  7.  A check does not operate as an assignment of any part of the fund against which it is drawn, and is subject to revocation, either by the act of the drawer, or by operation of law in the event of the death of the drawer prior to acceptance or certification by the bank; and, where checks were drawn to the order of charitable organizations during the taxable year and some were presented in the following year before the death*3295  of the drawer, and some were presented in that year after the death of the drawer, held that the contributions were not completed and therefore were not deductible in the taxable year.  8.  A stockholder gave an option to purchase his stock and thereafter consented to a sale of the option in consideration of an agreement by the holder thereof to divide the purchase price between himself and certain third parties.  The option was thereupon sold and the purchase price was divided pursuant to the agreement.  Held, that the stockholder realized no income from the sale of the option.  Joseph E. Davies, Esq., John W. Davis, Esq., Arthur J. Lacy, Esq., Clarence E. Wilcox, Esq., Franklin D. Jones, Esq., Sidney T. Miller, Esq., Herbert Pope, Esq., E. Barrett Prettyman, Esq., Lewis H. Paddock, Esq., Raymond H. Berry, Esq., Montgomery B. Angell, Esq., Luman W. Goodenough, Esq., Russell A. McNair, Esq., and Raymond N. Beebe, Esq., for the petitioners.  A. W. Gregg, Esq., W. Hall Trigg, Esq., Floyd F. Toomey, Esq., E. C. Lake, Esq., and J. F. Greaney, Esq., for the respondent.  MARQUETTE *224  BEFORE STERNHAGEN, MARQUETTE, AND VAN FOSSAN.  *3296  This proceeding, which is one of nine proceedings consolidated for hearing, is for the redetermination of a deficiency in income tax asserted by the respondent for the year 1919 in the amount of $5,004,398.20, as set forth in a deficiency letter dated April 7, 1925.  *225  The deficiency arises from the action of the respondent in determining that certain shares of the capital stock of the Ford Motor Co. of Michigan, which were sold by Horace E. Dodge in 1919, had a fair market value of $2,634 per share on March 1, 1913, instead of $9,489.34 per share as reported in the income-tax return filed by Horace E. Dodge for the year 1919, and in computing the profit from said sale on the basis of a March 1, 1913, value of $2,634 per share.  In his amended answer the respondent alleges that the said shares of the capital stock of the Ford Motor Co. had a fair market value on March 1, 1913, of not more than $3,547.84 per share; that in the income-tax return for the year 1919 filed by Horace E. Dodge there were wrongfully claimed and taken deductions from gross income on account of contributions or gifts alleged to have been made in that year in the amount of $25,000 to the Detroit Patriotic*3297  Fund; $50,000 to the Eastminster Presbyterian Church; $10,000 to the Presbyterian Church Finance Committee, and $25,000 to the Protestant Orphan Asylum; that there was wrongfully and illegally omitted from said return income for the year 1919 in the amount of $225,000, received by Horace E. Dodge in that year as part of the price for which he sold his shares of the capital stock of the Ford Motor Co.; that the income of Horace E. Dodge for the year 1919 should be adjusted by computing the profit from the sale of said shares of the capital stock of the Ford Motor Co. on the basis of a fair market value of $3,547.84 per share on March 1, 1913; by disallowing said deductions taken in the return filed by Horace E. Dodge for the year 1919 on account of said contributions or gifts to the Detroit Patriotic Fund and other organizations mentioned, and by adding to income said additional amount of $225,000 received as part of the consideration for the sale of said shares of the capital stock of the Ford Motor Co., and that the deficiency in tax for the year 1919 is $4,581,845.  FINDINGS OF FACT.  1.  Horace E. Dodge died testate on December 10, 1920, a resident of Wayne County, Mich., and*3298  shortly thereafter Anna T. Dodge, widow of Horace E. Dodge, and Howard B. Bloomer were duly appointed and qualified as executors of the last will and testament of Horace E. Dodge.  On June 14, 1924, the said Anna T. Dodge and John Ballantine were appointed and qualified as trustees under the will of said Horace E. Dodge.  This action is brought by said executors and said trustees on behalf of the estate of said decedent.  2.  On March 1, 1913, and prior thereto, and until June 17, 1919, Horace E. Dodge was the owner of 1,000 shares of the capital stock of the Ford Motor Co., a Michigan corporation, out of a total of 20,000 *226  shares of such stock outstanding.  This stock was acquired by Horace E. Dodge prior to March 1, 1913, at a cost which was less than its fair market value on that date.  3.  Shortly before April 15, 1919, Henry Ford and Edsel Ford, who were then the owners of approximately 58 1/2 per cent of the capital stock of the Ford Motor Co., desired to purchase the remaining 41 1/2 per cent of the stock owned by the minority stockholders, including that owned by Horace E. Dodge.  Without the knowledge of Horace E. Dodge they engaged the services of the Old Colony*3299  Trust Co. of Boston and its representatives to purchase the stock for them as undisclosed principals.  Pursuant to such arrangement and immediately prior to April 15, 1919, Stuart W. Webb, then an officer of and acting for the Trust Company and the undisclosed principals, accompanied by other representatives of the company, went to Detroit, Mich., to negotiate for the purchase of the stock of all minority stockholders of the Ford Company, including the 1,000 shares thereof then owned by Horace E. Dodge.  4.  There are hereby incorporated herein and made a part hereof, paragraphs numbered 4 to 28, inclusive, of the findings of fact in the case of . 5.  The contents of the letter of May 19, 1919, from Commissioner Roper to Arthur R. Ballantine, which letter is set forth in full in paragraph 26 of the findings of fact in the case of , were communicated to Horace E. Dodge and he instructed his attorney, Howard B. Bloomer, to negotiate the sale of the stock of the Ford Motor Co. owned by him, Horace E. Dodge, on the basis of the understanding as to March 1, 1913, value of said stock as set forth in said*3300  letter from Commissioner Roper to Ballantine.  6.  On June 17, 1919, Horace E. Dodge entered into a certain written agreement for the sale of his 1,000 shares of the capital stock of the Ford Motor Co. to Stuart W. Webb at a price of $12,500 per share, and under that agreement said stock was delivered to the purchaser and said purchase price paid.  7.  On April 15, 1920, Horace E. Dodge filed, or caused to be filed in the office of the collector at Detroit, Mich., his individual income-tax return for the calendar year 1919, he having previously been granted an extension of 30 days by the collector for the filing of such return.  Said return disclosed a total net income subject to normal tax of $2,965,690.07 and a total net income subject to surtax of $3,277.813.97, and tax due thereon in the amount of $2,301,184.28, of which there was paid at the date of the filing of the return the amount of $578,172.55.  There was included in the gross income shown on the return the amount of $3,010,660 as the profit derived by Horace E. Dodge on the sale of his shares of the capital stock of the *227  Ford Motor Co., this amount being the difference between the selling price of $12,500,000*3301  and the March 1, 1913, value of the stock, $9,489,340, computed on the basis of $9,489.34 per share in accordance with the letter of Commissioner Roper to Ballantine, and in computing net income there were deducted the following amounts as contributions or gifts made during the year 1919 to corporations organized and operated exclusively for religious, charitable, scientific or educational purposes: Detroit Patriotic Fund$45,833.50Eastminster Presbyterian Church54,738.54Presbyterian Church Finance Committee10,000.00Protestant Orphan Asylum25,000.00On June 8, 1920, the tax disclosed by said return was assessed by the then Commissioner of Internal Revenue, William M. Williams.  8.  Commissioner Williams went out of office April 11, 1921, and Millard F. West became Acting Commissioner of Internal Revenue on that date.  West's term as Acting Commissioner ended May 26, 1921, and he was succeeded by Commissioner David H. Blair, who has continued in office since.  9.  There are hereby incorporated and made a part hereof, paragraphs 141 to 332, inclusive, of the findings of fact in the case of *3302 10.  The fair market price or value on March 1, 1913, of the 1,000 shares of the capital stock of the Ford Motor Co., which were owned by Horace E. Dodge on that date and sold by him on June 17, 1919, was $10,000,000.  11.  On December 31, 1919, Horace E. Dodge drew a check for $25,000 against a joint account maintained by him and John F. Dodge in the Old Detroit National Bank, payable to "Detroit Patriotic Fund, subscription in full to Patriotic Charity Fund," and on the same day he mailed the check to the payee.  On January 2, 1920, said check was received by the payee; on Janury 6, 1920, it was deposited by the payee in the Bank of Detroit, and on January 7, 1920, it was presented to and paid by the First and Old Detroit National Bank, the then name of the drawee bank.  The amount of this check was claimed as a deduction from gross income in the individual income-tax return filed by Horace E. Dodge for the year 1919 and is included in the item of $45,833.50 mentioned in paragraph 7 hereof.  12.  Some months prior to December 31, 1919, representatives of the Eastminster Presbyterian Church of Detroit approached Howard B. Bloomer, attorney*3303  for Horace E. Dodge, relative to obtaining a loan from Horace E. Dodge for the construction of a church building.  Horace E. Dodge agreed to loan the church $50,000 with which to build a church building, and to buy the real estate upon *228  which the building was to be located.  Proposed contracts covering this loan were signed by the trustees of the church but were never executed by Dodge as he decided to give the money rather than to lend it.  On December 31, 1919, Horace E. Dodge drew a check for $50,000 against a joint account maintained by him and John F. Dodge in the old Detroit National Bank payable to the "Trustees of Eastminster Presbyterian Church for erection of a church on Manistaque Ave., Detroit, Michigan." On the same day said check was delivered to Howard B. Bloomer, after Horace E. Dodge had told Bloomer that he would have the check made out and given to him for the church.  On the evening of December 31, 1919, Bloomer telephoned Dr. Jacquess, a representative of the church, that he, Bloomer, had the check for the church.  On December 31, 1919, Horace E. Dodge executed a deed to the church for real property which had cost him $4,738.54.  The check mentioned*3304  remained in Bloomer's safe until January 13, 1920, when it was presented to the First and Old Detroit National Bank, the then name of the drawee bank, for certification, and was certified by said bank.  On the same day said check was deposited in the Wayne County and Home Savings Bank, Detroit, Mich., and a certificate of deposit was issued by that bank payable to "Trustees of Eastminister Presbyterian Church." The amount of this check was claimed as a deduction from gross income in the individual income-tax return filed by Horace E. Dodge for the calendar year 1919 and is included in the item of $54,738.54 mentioned in paragraph 7 hereof.  13.  Prior to December 31, 1919, Horace E. Dodge had informed Howard B. Bloomer that he desired to purchase a farm for the Protestant Orphan's Asylum summer home.  On December 31, 1919, he told Bloomer that he would have a check given to him, Bloomer, for $25,000, payable to the order of the Protestant Orphan's Asylum.  On the same day Horace E. Dodge drew a check for $25,000 against a joint account maintained by him and John F. Dodge in the Old Detroit National Bank, payable to the "Trustees of Protestant Orphan's Asylum of Detroit," and had*3305  the check delivered to Bloomer.  Bloomer kept the check until January 13, 1920, when it was presented to the First and Old National Bank, the then name of the drawee bank, for certification, and was certified by said bank.  On the same day said check was deposited in the Wayne County and Home Savings Bank, of Detroit, Mich., and a certificate of deposit was issued by that bank payable to "Trustees of Protestant Orphan's Asylum." Bloomer retained the certificate of deposit and placed it in his safe for safe-keeping, and he later assisted the Protestant Orphan's Asylum in finding a farm.  When a suitable farm was found Bloomer acted as attorney for the Protestant Orphan's Asylum*229  in the matter, and the certificate of deposit was endorsed to him and was deposited in his own account, and he paid for the farm with the proceeds of the certificate of deposit and additional funds of his own, for which additional funds he was later reimbursed.  The amount of said check was claimed as a deduction from gross income in the individual income-tax return filed by Horace E. Dodge for the year 1919 and is the item of $25,000 mentioned in paragraph 7 hereof.  14.  On December 31, 1919, Horace*3306  E. Dodge drew a check for $10,000 against a joint account maintained by him and John F. Dodge in the Old Detroit National Bank, payable to "A. F. Edwards, Chairman Finance Committee Presbyterian Church," and on the same day he mailed the check to the payee.  On January 2, 1920, said check was received by the payee through the mail; on January 6, 1920, it was deposited by the payee in the Peoples State Bank of Detroit, and on January 7, 1920, it was presented to and paid by the First and Old Detroit National Bank, the then name of the drawee bank.  The amount of said check was claimed as a deduction from gross income in the individual income-tax return filed by Horace E. Dodge for the year 1919 and is the item of $10,000 mentioned in paragraph 7 hereof.  15.  On April 3, 1919, John F. Dodge and Horace E. Dodge, each then being the owner of 1,000 shares of the stock of the Ford Motor Co., gave options upon their shares of stock to one Emanuel T. Berger.  These options gave Berger or his assigns the right at any time within one month to purchase said stock at $12,500 per share, plus any and all dividends ordered paid by the Supreme Court of Michigan, and any amount which might be levied*3307  or assessed by the United States or the State of Michigan for income taxes, excess-profits taxes, surtaxes, or any other tax.  These options were later extended until noon, July 1, 1919.  About the 8th or 9th of June, 1919, John F. Dodge discussed with Bloomer, his attorney, the prospective sale by the two Dodges of their Ford stock to Stuart W. Webb.  Dodge said that Webb had offered Berger $675,000 for the surrender of his options, but that he, dodge, would not consider the Webb offer until after the expiration of the Berger options, unless Berger would surrender his options, and that if he would surrender them the Dodges would give a new option to Bloomer and McMeans, secretary to the two Dodges, which would be worth $675,000 and which should be divided among Berger, Bloomer, and McMeans.  Dodge instructed Bloomer to see Berger and put this proposition to him, which Bloomer did the next day.  After some preliminary negotiations, an agreement in writing was made by and between Berger and Webb, by which Webb agreed to pay Berger $675,000 in consideration of the *230  surrender by Berger of his options.  This agreement was dated June 17, 1919, and simultaneously with the execution*3308  thereof Berger executed an assignment of his rights under said agreement to the Old Detroit National Bank and signed a letter to that bank directing it to pay the $675,000 collected under the agreement in equal parts to himself, McMeans, and Bloomer.  On July 16, 1919, the Old Detroit National Bank received from Webb $675,000 "On account of the Berger option agreement dated June 17, 1919," and paid it over in equal parts to Berger, McMeans, and Bloomer by cashier's checks dated July 17, 1919.  16.  The books of account of Horace E. Dodge were kept and his income-tax return made on the cash receipts and disbursements basis.  The checks mentioned in paragraphs 11, 12, 13, and 14 hereof were posted to the check register of Horace E. Dodge as disbursements of December 31, 1919.  They were posted from the check register to the ledger account of Horace E. Dodge as disbursements of December 31, 1919, shortly thereafter in the regular course of business.  The books of Horace E. Dodge were closed immediately after the end of the calendar year, which was also his fiscal year, and the said checks were treated as 1919 disbursements.  The same practice was involved in closing the books of Horace*3309  E. Dodge for the years 1917 and 1918, the checks issued prior to the end of the closing period being treated as disbursements for the year in which they were issued.  17.  On January 10, 1921, Deputy Commissioner G. W. Newton addressed a letter to the executor of the estate of Horace E. Dodge with respect to certain adjustments made by the Bureau of Internal Revenue covering the income-tax return of Horace E. Dodge for the year 1919, wherein additional tax in the amount of $534,420.20 was alleged to be due, said additional tax being based upon adjustments covering only (1) a dividend of $963,769.20 received by Horace E. Dodge in the year 1919, which dividend he had reported in an amended income-tax return for the year 1916 as taxable income in that year, and (2) disallowance of a deduction for a contribution of $100 made by Horace E. Dodge to the Roosevelt Memorial Fund.  Said additional tax was assessed on April 12, 1921, on the March, 1921, List, and a claim for abatement thereof was filed on April 26, 1921.  Said claim for abatement of said additional tax was denied by the Income Tax Unit.  On May 28, 1921, Howard B. Bloomer executor of the will of Horace E. Dodge, deceased, addressed*3310  a letter to the Commissioner appealing to the Committee on Appeals and Review from the decision and refusal of the Income Tax Unit to abate said additional tax of $534,420.20, and requested a hearing in the matter.  A hearing was thereafter had before the Committee on Appeals and Review upon said appeal and on April 24, 1922, a letter *231  was addressed to Messrs. McGregor & Bloomer, at Detroit, Mich., by F. G. Smith, Secretary of the Committee on Appeals and Review, advising them that the Committee on Appeals and Review had recommended that the action of the Income Tax Unit be sustained and that the appeal be denied.  On June 15, 1922, E. H. Batson, Deputy Commissioner, through B. S. Kimball, Head of Division, addressed a letter to the said Howard B. Bloomer, executor of the estate of Horace E. Dodge, stating that the action of the Income Tax Unit with respect to the claim for abatement of said additional tax had been sustained by the Committee on Appeals and Review and that said claim had been rejected.  Thereafter the said Howard B. Bloomer, Executor, received a notice and demand for payment of said additional tax and interest thereon from the collector at Detroit, and on*3311  June 28, 1922, the said Howard B. Bloomer, as executor of the estate of Horace E. Dodge, paid under protest to the collector at Detroit said additional tax in the amount of $534,420.20.  18.  Some time prior to December 8, 1922, L. H. Rushbrook and F. L. Van Haaften, field agents in the Bureau of Internal Revenue, made an examination of the books and records of Horace E. Dodge, deceased, for the years 1917 to 1920, inclusive, and made a report of their examination under date of December 8, 1922.  A copy of said report was mailed to Howard B. Bloomer, executor of the estate of Horace E. Dodge, on December 11, 1922.  On April 2, 1923, a supplemental report covering the income-tax liability of Horace E. Dodge for the year 1919 was transmitted to the Commissioner of Internal Revenue.  19.  On May 28, 1923, a claim for refund of said additional tax of $534,420.20 paid under protest on June 28, 1922, was sworn to and filed with the collector at Detroit by Howard B. Bloomer, executor of the estate of Horace E. Dodge, and an oral hearing thereon requested.  On September 18, 1923, a letter was sent by Commissioner David H. Blair to the said Howard B. Bloomer in relation to the assessment*3312  of additional income taxes for the year 1919 against the estate of Horace E. Dodge, and denying the request made by Bloomer that the matter be referred to the Attorney General for his opinion.  20.  On January 3, 1924, a "30-day" letter was addressed by J. G. Bright, Deputy Commissioner, to Howard B. Bloomer, executor of the estate of Horace E. Dodge, giving data on the reexamination of the income-tax returns of Horace E. Dodge for the years 1917 to the date of Horace E. Dodge's death, December 10, 1920, and proposing additional tax for the year 1919 in the amount of $212,098.83.  On April 12, 1924, a protest was filed with the Bureau of Internal Revenue by said Howard B. Bloomer, executor of the estate of Horace E. Dodge, from the findings of the Income Tax Unit with *232  respect to the returns of Horace E. Dodge for the years 1917 to 1920, and on October 13, 1924, a letter was addressed by J. G. Bright, Deputy Commissioner, to the said Howard B. Bloomer, executor, stating that said protest of April 12, 1924, had been referred to the Solicitor of Internal Revenue for his opinion thereon.  An oral hearing on said protest was had in the Solicitor's Office on December 16, 1924, and*3313  on April 14, 1925, the Solicitor rendered his opinion thereon, recommending that the protest be sustained in part and denied in part.  21.  No part of said additional taxes of $534,420.20 and $212,098.83, respectively, assessed or proposed to be assessed against the estate of Horace E. Dodge for the year 1919 is due to any change made or proposed to be made in valuation of $9,489.34 per share made by Commissioner Roper and used in the original return filed by Horace E. Dodge for the year 1919, as the basis for computing the profit realized by him in that year from the sale of his shares of the capital stock of the Ford Motor Co.  22.  Prior to January 1, 1925, the executors and trustees under the will of Horace E. Dodge, deceased, paid the United States Government estate taxes in the amount of $8,879,073.28, and thereafter on December 22, 1925, said trustees and executors filed in the office of the collector at Detroit their claim for refund of such portion of said estate tax as would be refundable to them should the estate of Horace E. Dodge be found liable for any additional income taxes for the calendar year 1919.  23.  Prior to January 1, 1925, the estate of Horace E. Dodge, *3314  deceased, paid to the State of Michigan, inheritance taxes in the amount of $753,192.25 and interest thereon in the amount of $75,068.26.  24.  On January 31, 1925, the Commissioner and Howard B. Bloomer, as executor of the estate of Horace E. Dodge, entered into a written agreement, which is in the words and figures following, to wit: INCOME AND PROFITS TAX WAIVER (For taxable years ended prior to March 1, 1921) In pursuance of the provisions of existing Internal Revenue Laws, ESTATE OF HORACE E. DODGE, a taxpayer of Detroit, Michigan, 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 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, 1925, 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*3315  be extended sixty days, or (2) if an appeal is filed with said *233  Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.  ESTATE OF HORACE E. DODGE, Taxpayer.By HOWARD B. BLOOMER, Executor.D. H. BLAIR, Commissioner.If this waiver is executed on behalf of a corporation, it must be signed by such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which, the seal, if any, of the corporation must be affixed.  25.  On March 12, 1925, J. G. Bright, Deputy Commissioner, mailed to Howard B. Bloomer, executor of the estate of Horace E. Dodge, a letter which is as follows: TREASURY DEPARTMENT, Washington, March 12, 1925.Office of Commissioner of Internal Revenue.  IT:PA-5 IIP Mr. HOWARD B. BLOOMER, Estate of Horace E. Dodge, 840 Penobscot Building, Detroit, Michigan.SIR: An adjustment of the income tax return filed by Horace E. Dodge for the year 1919 discloses a deficiency in tax amounting to $5,004,398.20, *3316  as shown in the following statement: Block D. as reported, 1000 shares Ford MotorCompany stock Sale price$12,500,000.00March 1, 1913 value9,489,340.00Profit3,010,660.00March 1, 1913, value reported9,489,340.00March 1, 1913, value corrected2,634,000.00Profit understated6,855,340.00Normal and surtax at 73%.Additional tax5,004,389.20If you protest against the determination of the deficiency the Bureau desires to proceed in the regular manner to the consideration of any information submitted by you.  However, the period within which the Commissioner may assess additional taxes for the year 1919 will expire in the near future, and in order to avoid the necessity of making an immediate assessment prior to such consideration, it is requested that you sign and return the enclosed form of waiver to this office within fifteen days of the date of this letter.  In the event the waiver is not received within the time stated above for its filing, it will be necessary to make assessment under the provisions of section 274(d) of the Revenue Act of 1924.  Respectfully, J. G. BRIGHT, Deputy Commissioner.*234  26.  On April 7, 1925, the*3317  Commissioner, by J. G. Bright, Deputy Commissioner, mailed to Howard B. Bloomer, executor of the estate of Horace E. Dodge, a "60-day" letter, the deficiency letter herein, which is as follows: TREASURY DEPARTMENT, Washington, April 7, 1925.IT:PA-5 IIP Mr. HOWARD B. BLOOMER, Estate of Horace E. Dodge, 840 Penobscot Building, Detroit, Michigan.SIR: An examination of the income tax return filed by Horace E. Dodge for the year 1919 discloses additional tax in the amount of $5,004,398.20, which was indicated to you in a letter dated March 12, 1925.  In accordance with the provisions of Section 274 of the Revenue Act of 1924, you are allowed 60 days from the date of this letter within which to file an appeal to the United States Board of Tax Appeals contesting in whole or in part the correctness of this determination.  Where a taxpayer has been given an opportunity to appeal to the United States Board of Tax Appeals and has not done so within the 60 days prescribed and an assessment has been made, or where a taxpayer has appealed and an assessment in accordance with the final decision on such appeal has been made, no claim in abatement in respect*3318  of any part of the deficiency will be entertained.  If you acquiesce in this determination and do not desire to file an appeal, you are requested to sign the enclosed agreement consenting to the assessment of the deficiency and forward it to the Commissioner of Internal Revenue, Washington, D.C., for the attention of IT:PA-5:IIP.  In the event that you acquiesce in a part of the determination, the agreement should be executed with respect to the items agreed to.  Respectfully, D. H. BLAIR, Commissioner.By J. G. BRIGHT, Deputy Commissioner.Enclosures: Statements.  27.  The estate of Horace E. Dodge appealed to this Board from the determination of the Commissioner as set forth in the deficiency letter of April 7, 1925, and the petition was filed on June 4, 1925.  The respondent filed an answer to the petition and on December 27, 1926, upon leave duly granted, filed an amended answer thereto.  In his amended answer the respondent alleged that the shares of the capital stock of the Ford Motor Co. had a fair market value on March 1, 1913, of not more than $3,547.84 per share; that in the income-tax return filed by Horace E. Dodge for the year 1919 there were wrongfully*3319  claimed and taken as deductions from gross income the amount of $25,000, contributed by Horace E. Dodge to the Detroit Patriotic Fund, as set forth in paragraph 11 hereof; $50,000 contributed by Horace E. Dodge to the Eastminster Presbyterian Church of Detroit, as set forth in paragraph 12 hereof; $25,000 contributed *235  by Horace E. Dodge to the Protestant Orphan's Asylum, as set forth in paragraph 13 hereof, and $10,000 contributed by Horace E. Dodge to the Presbyterian Church Finance Committee, as set forth in paragraph 14 hereof; that there was wrongfully and illegally omitted from said return income in the amount of $225,000 received by Horace E. Dodge in the year 1919 from the Old Colony Trust Co., through Stuart W. Webb, its agent, in connection with the Berger option, under the circumstances set forth in paragraph 15 hereof; that the income of Horace E. Dodge for the year 1919 should be adjusted by computing the profit from the sale of his shares of the capital stock of the Ford Motor Co. on the basis of a fair market value of $3,547.84 per share on March 1, 1913; by disallowing said deductions taken in the return filed by Horace E. Dodge for the year 1919 on account*3320  of said contributions to the Detroit Patriotic Fund, the Eastminster Presbyterian Church, the Presbyterian Church Finance Committee and the Protestant Orphan's Asylum, and by adding to income said additional amount of $225,000 alleged to have been received by Horace E. Dodge in connection with the Berger option, and that the deficiency in tax for the year 1919 is $4,581,845.00.  OPINION.  MARQUETTE: The first two issues raised by the pleadings in this proceeding are identical with the issues in the case of , and the facts relative thereto are substantially the same as in the Couzens case.  On the authority of our decision in , we hold that the respondent had the right to determine the fair market price or value of Horace E. Dodge's stock in the Ford Motor Co., and from the evidence we find that the fair market price or value of said stock on March 1, 1913, was at the rate of $10,000 per share.  Therefore, the basis for computing the gain from the sale of the stock owned by Horace E. Dodge was $10,000,000 and the gain was $2,500,000 instead of $3,010,660, as returned.  *3321  The other issues herein are the same as those raised by the amended answer and replication in the case of John F. Dodge v. Commissioner, this day decided, , and the facts are essentially the same as those in that case.  On the authority of our decision in the Estate of John F. Dodge, supra, we hold: (1) That assessment and collection of the additional tax asserted by the respondent in his amended answer herein are not barred by the statute of limitation; (2) that the contributions or gifts made by Horace E. Dodge to the Detroit Patriotic Fund, the Eastminster Presbyterian Church, the Presbyterian Finance Committee, and the Protestant Orphan's Asylum, as set forth in paragraphs 11, 12, 13, and 14 of the findings of fact herein, were not made in the year 1919 within the meaning of *236  the Revenue Act of 1918, and are not deductible in computing the net income of Horace E. Dodge for 1919, and (3) that Horace E. Dodge realized no income from the sale of the Berger option.  Reviewed by the Board.  Judgment will be entered under Rule 50.SMITH, MORRIS, ARUNDELL, and MILLIKEN did not participate in the consideration or decision of this*3322  proceeding.