Court Opinion

ID: 4606599
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:38:53.189012+00
Date Added: 2024-06-11T07:53:24.118758
License: Public Domain

VIRGINIA CHASE WEDDELL, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Weddell v. CommissionerDocket No. 19822.United States Board of Tax Appeals21 B.T.A. 411; 1930 BTA LEXIS 1848; November 24, 1930, Promulgated *1848  1.  Henry Cappellini,14 B.T.A. 1269, followed as to constitutionality of section 280 of the Revenue Act of 1926.  2.  Assessments against transferee of income taxes due from estate not barred by statute of limitations.  E. Randolph Williams, Esq., for the petitioner.  Arthur Carnduff, Esq., for the respondent.  VAN FOSSAN *411  This proceeding was brought to redetermine deficiencies in income taxes in the sums of $4,157.50 and $42.69 for the years 1920 and 1921, respectively, proposed for assessment against the petitioner as transferee of the assets of the estate of James H. Steedman, Deceased.  Numerous allegations of error are made, all of which were waived by petitioner except the following: (1) The respondent has not lawful right to make the proposed assessment against the petitioner as an individual, as the executrix of the estate of James H. Steedman, or as transferee of the assets of that estate.  (2) Under the pertinent provisions of the revenue act the taxes are barred by the statute of limitations.  (3) That section 280 of the Revenue Act of 1926 is unconstitutional.  FINDINGS OKF FACT.  FINDINGS OF FACT. *1849  James Harrison Steedman f St. Louis, Mo., died on the first day of July, 1921.  His widow duly qualified as executrix in the probate court of St. Louis, and after the estate had been fully administered was finally discharged by order of said probate court on June 15, 1923.  Shortly prior to this order of discharge, she married Alexander W. Weddell, who was then Consul General for the United States at Calcutta, India.  Mrs. Weddell has not since her marriage resided at St. Louis.  At the termination of her husband's service as Consul General in India, he became Counsul General for the United States, residing in Mexico City, in which service he continued until the 30th day of September, 1928.  His wife resided with him while in India and Mexico, except for brief periods when on visits to the United States.  The individual income tax return of James Harrison Steedman for the calendar year 1920 was made for the decedent by George F. Steedman as attorney.  This tax return was filed on the 14th day of March, 1921.  *412  While executrix of James Harrison Steedman the petitioner (then Virginia Chase Steedman) made to the collector of internal revenue income tax returns for her*1850  late husband to July 1, 1921, on the 16th day of February, 1922.  She also made return of income for the period during which she was executrix.  Under date of August 29, 1924, the internal revenue agent in charge at St. Louis addressed a letter to "The Estate of James Harrison Steedman, Virginia C. Steedman, Executrix," covering an audit of July 1, 1921, through the years of 1922 and 1923.  This reported a deficiency tax due by the executrix.  Under the same date, August 29, 1924, a letter from the internal revenue agent in charge at St. Louis, entitled "In re - James Harrison Steedman," was issued but never received by Mrs. Weddell.  This letter refers to a report of July 23, 1924, dealing with an alleged audit for the years 1919 and 1920, and from January 1, 1921, to July 1, 1921.  This proposed an additional tax of $4,199.60.  The additional tax was due to an alleged profit arising from a sale of stock.  Under date of November 17, 1925, the Treasury Department addressed a letter to "The Estate of James Harrison Steedman, c/o S. L. Swarts, Attorney," referring to a deficiency in taxes.  This was a 60-day letter.  Under date of March 15, 1926, the collector of internal revenue*1851  at St. Louis, Mo., issued two notices in an envelope addressed to "James Harrison Steedman, Deceased, c/o S. L. Swarts, Attorney." Under date of April 20, 1926, the collector of internal revenue at St. Louis, Mo., addressed a letter to "James Harrison Steedman, Deceased, c/o S. L. Swarts, Attorney," the letter being entitled "LAST NOTICE before Execution of Warrant for Distraint." No effort was thereafter made by the collector to enforce, by distraint or otherwise.  Under date of July 15, 1926, the Treasury Department addressed a letter to Mrs. Alexander W. Weddell, c/o American Consulate General, Mexico City, the first paragraph of which reads as follows: As provided in Section 280 of the Revenue Act of 1926, there is proposed for assessment against you as Transferee of the Assets of the Estate of James H. Steedman, Deceased, St. Louis, Missiouri, the sum of $4,200.19, representing unpaid additional income tax assessed against the Estate for 1920 and 1921, in accordance with the attached statement.  This was a sixty-day letter, and thereafter, through her counsel, S. L. Swarts, Mrs. Weddell filed a petition with the United States Board of Tax Appeals, asking that the Board*1852  might hear the proceeding and deny to the Commissioner of Internal Revenue the right to make the proposed assessment of taxes against her.  There have been assessed against the estate of James Harrison Steedman, deceased, taxes for the year 1920 in the amount of $4,157.50, *413  and for the year 1921 in the amount of $42.69, which amounts are still outstanding and unpaid.  The assessments were made, as will appear from the photostatic copies of the returns heretofore referred to and filed as Exhibit A and Exhibit B, respectively.  The petitioner, as executrix and sole beneficiary of the estate of James Harrison Steedman, received as of July 1, 1921, the date of the death of the said James Harrison Steedman, property of the value of $1,480,544.54, and the final settlement of her administration of the estate of said deceased, there were transferred, assigned and set over to her as sole residuary legatee shares of stock of the value of $34,130.  We find the following additional facts: The return for the calendar year 1920 bears the stamp "audited," the date November 22, 1924, the notation of an increased tax liability of $4,157.50 and that the assessment was included in the*1853  February, 1926, assessment list.  The return for the period from January 1 to June 30, 1921, beats the stamp "audited," the date November 22, 1924, the notation of an increased tax liability of $42.69 and that the assessment was included in the February, 1926, assessment list.  OPINION.  VAN FOSSAN: The counsel for the petitioner has presented an elaborate brief in support of the contention that section 280 of the Revenue Act of 1926 is unconstitutional.  We have disposed of this issue in , and have cited that case in numerous subsequent decisions.  See also , and . The income-tax return of James Harrison Steedman for the year 1920 was filed March 14, 1921, by George H. Steedman, his attorney.  James Harrison Steedman died July 1, 1921.  His widow, the petitioner, duly qualified as the executrix of his estate and filed on February 16, 1922, the income-tax return of the said James Harrison Steedman for the period from January 1, 1921, to June 30, 1921, inclusive.  It was stipulated that "the assessments*1854  were made, as will appear from the photostatic copies of the returns * * * filed as exhibits A and B, respectively." On examination of the exhibits it appears that the assessments were included in the February, 1926, "List," which term means the assessment list of that month.  It therefore appears, and there is no contention to the contrary, that the assessment of tax for both years was made in February, 1926.  *414  In support of his contention that the appropriate statutes of limitation serve as a bar to the assessment of the taxes for both years, counsel for the petitioner cites section 280 of the Revenue Act of 1926 and section 1109 of that act.  Subdivision (c) of section 280 provides that: For the purposes of this section, if the taxpayer is deceased * * * the period of limitation for assessment against the taxpayer shall be the period that would be in effect had the death * * * not occurred.  Under the appropriate section of the Revenue Acts of 1918 and 1921 assessment must be made for the year 1920 within five years after the return was filed, and for the year 1921 within four years after the filing of the return.  Hence, the period for assessment against James*1855  Harrison Steedman, the original taxpayer and transferor, would have expired on March 14, 1926, as to the 1920 income taxes, and on February 16, 1926, as to the 1921 income taxes.  However, subdivision (b)(1) of the said section 280 provides that the period of limitation for assessment of any liability of a transferee or fiduciary shall be "within one year after the expiration of the period of limitation for assessment against the taxpayer." Section 1109 of the Revenue Act of 1926 provides: (a) Except as provided in sections 277, 278, 310 and 311 - (1) Notwithstanding the provisions of section 3182 of the Revised Statutes or any other provision of law, all internal-revenue taxes shall (except as provided in paragraph (2) or (3) of this subdivision) be assessed within four years after such taxes became due, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of five years after such taxes became due.  Subdivisions (a)(2) and (3) of section 277 of that act (not cited by the petitioner's counsel) are as follows: (2) The amount of income, excess-profits, and war-profits taxes imposed by the Revenue Act of 1921, and*1856  by such Act as amended, for the taxable year 1921 and succeeding taxable years, and the amount of income taxes imposed by the Revenue Act of 1924, shall be assessed within four years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period.  (3) The amount of income, excess-profits, and war-profits taxes imposed by 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, the Act entitled "An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes," approved October 3, 1913, the Revenue Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, and by any such Act as amended, shall be assessed within five years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period.  The tax for the year 1920 was assessed within the five-year period prescribed in section 277(a)(3) and therefore the statute of limitations did not bar the assessment against*1857  the transferor and under *415  the provision of section 280(b)(1) against the transferee.  ; ; ; ; Caroline J. Shaw, Executrix, 21, B.T.A. 400.  As to the year 1921, a different situation exists.  The period for assessment of the tax against the transferor for that year expired on February 16, 1926, prior to the passage of the revenue Act of 1926 (February 26, 1926).  The record shows that such assessment was made in February, 1926, but it does not show the day of that month when such action was taken.  The exact date on which the assessment was made is an essential fact to be proven.  The petitioner has failed to sustain that burden.  Hence, we can not say that the statute is effective as a bar to the assessment against the transferor.  Section 280(b)(2) provides: (b) The period of limitation for assessment of any such liability of a transferee or fiduciary shall be as follows: * * * (2) If the period of limitation for assessment against the taxpayer expired before*1858  the enactment of this Act but assessment against the taxpayer was made within such period, - then within six years after the making of such assessment against the taxpayer, but in no case later than one year after the enactment of this Act.  The deficiency letter was dated July 15, 1926, well within the limitation prescribed in the above section.  The statute of limitations does not bar assessment against the petitioner as the transferee of the assets of the estate of James H. Steedman, deceased.  Reviewed by the Board.  Decision will be entered for the respondent.