Court Opinion

ID: 4614342
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:29:59.83099+00
Date Added: 2024-06-11T07:54:46.263284
License: Public Domain

PHOENIX NATIONAL BANK AND PHOENIX SAVINGS BANK & TRUST CO., PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Phoenix Nat'l Bank v. CommissionerDocket No. 13149.United States Board of Tax Appeals14 B.T.A. 115; 1928 BTA LEXIS 3011; November 13, 1928, Promulgated *3011  1.  Notice of a deficiency as to one of two affiliated corporations whose officers are the same is not notice to the other company as contemplated by the statute.  2.  The filing of an appeal by the corporation to which no notice of a deficiency was sent or a joinder by it in the appeal of the corporation which received such notice, does not confer jurisdiction upon the Board to consider the appeal of the first company.  3.  In the absence of any agreement providing that one of two affiliated corporations shall pay the entire tax assessed against both, the tax shall be assessed on the basis of the net income properly assignable to each.  Section 240 of the Revenue Acts of 1918 and 1921.  J. Robert Sherrod, Esq., for the petitioners.  Bruce A. Low, Esq., and George S. Herr, Esq., for the respondent.  VAN FOSSAN *116  This proceeding is brought to redetermine the income and profits tax of the Phoenix National Bank in the sums of $1,018.52 and $623.88 for the years 1920 and 1921, respectively.  In the original petition and through the amendments and motions made thereafter the petitioner asserts (1) that the respondent erred in determining the*3012  petitioner to be affiliated with the Phoenix Savings Bank & Trust Co.; (2) that in the event that the affiliation is determined to be proper the respondent erred in assessing the entire proposed deficiency against the petitioner rather than allocating it to the petitioner and the Phoenix Savings Bank & Trust Co. in proportion to their net incomes; (3) that the statute of limitations has run against the assessment of the tax; and (4) the appeal should be dismissed as to the Phoenix Savings Bank & Trust Co. because the respondent failed to notify that company of a deficiency as required by statute.  The petitioner has abandoned its first and third contentions and now presents for our consideration the question raised in its second and fourth point.  FINDINGS OF FACT.  The Phoenix National Bank, hereinafter called the Bank, is a corporation organized under the laws of the United States with its offices and principal place of business located at Columbia, Tenn., and is engaged in the general banking business.  The Phoenix Savings Bank & Trust Co., hereinafter called the Trust Company, is a corporation organized under the laws of the State of Tennessee, with its offices and principal*3013  place of business located at Columbia, Tenn., and is engaged in performing the functions usual to a savings bank and trust company.  Each of said corporations filed a separate income and profits-tax return for the calendar years 1920 and 1921.  The respondent determined that the said corporations were affiliated within the meaning of section 240 of the Revenue Acts of 1918 and 1921 and determined their respective incomes to be as follows: Net income19201921Phoenix National Bank$32,147.63$22,382.18Phoenix Savings Bank & Trust Co8,341.785,373.31Consolidated net income40,489.4127,755.49The petitioner signed no agreement consenting to the assessment of the entire tax against it as provided by sections 240(a) and 240(b) of the Revenue Acts of 1918 and 1921, respectively.  *117  On February 6, 1926, the respondent issued a 60-day deficiency letter addressed to Phoenix National Bank, Columbia, Tenn., asserting deficiencies against the petitioner of $1,018.52 and $623.88 for the years 1920 and 1921, respectively.  The first paragraph of that letter is as follows: An examination of your income and profits tax returns and of your books*3014  of account and records and those of your affiliated company disclosing a deficiency in tax for the years 1920 and 1921 aggregating $1,642.40 as shown in detail in the attached statement.  The pertinent part of the statement attached to the deficiency letter is as follows: Returns examinedCompanyYearFormPhoenix National Bank, Columbia, Tenn1920112019211120Phoenix Savings Bank & Trust Co., Columbia, Tenn1920112019211120Tax liabilityCompanyYearDeficiencyOverassessmentPhoenix National Bank, Columbia, Tenn1920$1,018.52None.1921623.88NoneTotal1,642.40The revenue agent's report dated February 19, 1925, has been approved as submitted.  A copy of the revenue agent's report of February 19, 1925, above mentioned, was mailed to Mr. John S. Glenn, Accountant, Nashville, Tenn., and bears the heading: In re: Phoenix NationalBank Phoenix Savings Bank & Trust Co. Class B. Consolidation The original petition contains in its caption the names of both the Bank and the Trust Company.  It is verified on behalf of the Bank by H. O. Fulton, its cashier, and on behalf of the Trust*3015  Company by W. A. Dale, its president.  By its motion filed April 29, 1926, the respondent prayed for an order striking from the petition as one of the appellants the Trust Company because the petition did not show that any deficiency letter was mailed to the said Trust Company.  The present petitioner and the Trust Company acquiesced in this request by motion filed May 17, 1926, and on May 18, 1926, the order was entered "that this proceeding in so far as it affacts the Phoenix Savings Bank and Trust Company be and the same is hereby dismisssed, *118  no final determination having been made by the Commissioner with respect thereto." At the hearing the respondent moved that the order of the Board dated May 18, 1926, be vacated, and the petitioner resisted the motion.  OPINION.  VAN FOSSAN: The motion of respondent to vacate the order of the Board of May 18, 1926, dismissing the petition in so far as it affects the Phoenix Savings Bank & Trust Co. is denied.  ; ; *3016 . No deficiency was determined against said company and no notice of a deficiency mailed to it.  Jurisdiction may not be conferred on the Board by an improper joinder of parties petitioner. The record discloses no agreement between the Bank and the Trust Company relating to the apportionment of the tax to be assessed against them as affiliated corporations, and such tax must, therefore, be assessed against the corporations upon the basis of the net income properly assignable to each, as provided in section 240(a) of the Revenue Act of 1918 and section 240(b) of the Revenue Act of 1921.  . Judgment will be entered under Rule 50.