Court Opinion

ID: 4619513
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:40:45.573832+00
Date Added: 2024-06-11T07:55:39.312699
License: Public Domain

LOUIS COSTANZO, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.  OLIVER MONACO, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Costanzo v. CommissionerDocket Nos. 21045, 21046.United States Board of Tax Appeals16 B.T.A. 1294; 1929 BTA LEXIS 2421; June 29, 1929, Promulgated *2421  1.  The petitioners, on the dissolution of a corporation of which they were the principal stockholders, received liquidating dividends in excess of the amount of additional taxes subsequently assessed against the dissolved corporation.  Held that the petitioners are transferees within the meaning of section 280 of the Revenue Act of 1926.  2.  Where the period of limitation for assessment of taxes against the taxpayer did not expire until after the enactment of the Revenue Act of 1926, and the liability for unpaid taxes of the taxpayer was asserted against petitioners, as transferees, within one year after the expiration of such period, collection of the taxes is not barred.  W. B. Francis, Esq., and Sion B. Smith, Esq., for the petitioners.  Harold Allen, Esq., and W. R. Lansford, Esq., for the respondent.  ARUNDELL*1294  These proceedings, which were consolidated for hearing and decision, involve the redetermination of the liability of the petitioners, as transferees, for unpaid income and excess-profits taxes of the Stellar Coal Mining Co., in the amount of $1,940.01 for the year 1919 and $4,601.72 for the year 1920.  The issues*2422  are whether the petitioners are transferees within the meaning of section 280 of the Revenue Act of 1926, and whether collection of the taxes *1295  against the petitioners is barred by the statute of limitations.  The cases were submitted on the pleadings and stipulation of facts.  FINDINGS OF FACT.  Oliver Monaco of Adena, Ohio, and Louis Costanzo of Wheeling, W. Va., were the principal stockholders, and president and vicepresident, respectively, of the Stellar Coal Mining Co., a corporation organized in February, 1918, with a capital stock of $70,000, to engage in the business of mining coal.  Each petitioner owned approximately $26,000 of the corporation's stock.  In June, 1920, the corporation sold its assets to the Woodward Coal Co. at a profit of $30,837.39.  It was then liquidated and the stockholders thereof received their pro rata share of its assets.  The sum received by each petitioner was in excess of the amount of the deficiencies proposed against them as transferees.  The corporation was legally dissolved in April, 1921.  The income-tax returns of the Stellar Coal Mining Co. for the years 1919 and 1920 were filed on March 13, 1920, and March 15, 1921, respectively. *2423  The tax disclosed by the returns was duly paid.  On October 24, 1923, the respondent mailed to the Stellar Coal Mining Co. a letter, which read, in part, as follows: You will be given ten days from the date of this letter in which to verify computations at the end of which time the additional tax stated above will be assessed.  The tax liability referred to for the year 1919 was $1,940.01, and for the year 1920, $4,601.72.  The said additional taxes were assessed against the Stellar Coal Mining Co. on January 10, 1924, the assessments appearing on page 44 of the January, 1924, assessment list.  No part of the additional taxes assessed has been paid.  The notices forming the basis of these proceedings were mailed by respondent to the petitioners on September 7, 1926.  The petitions were filed on November 4, 1926.  No consent agreements have ever been filed by the petitioners.  It has been stipulated that the assessment of $1,940.01 of the amount of the deficiencies determined against the petitioners is barred by the statute of limitations.  OPINION.  ARUNDELL: Petitioners contend that the term "transferee," as used in section 280 of the Revenue Act of 1926, is limited*2424  to heirs, legatees, devisees and distributees, the four classes named in subsection (f) of section 280.  The statute does not define the meaning of the word *1296  "transferee." The language of section 280 (f) was not intended, as we held in , to limit the meaning of the term to the classes mentioned, but was inserted to eliminate any doubt that it included those four classes.  On the dissolution of the Stellar Coal Mining Co., petitioners, as stockholders thereof, received liquidating dividends on their stock in excess of the amount of the liability the respondent has asserted against them for unpaid taxes of the dissolved corporation.  The petitioners are clearly transferees of property of the Stellar Coal Mining Co. ; certiorari denied, ; ; . The respondent concedes that collection of the deficiency asserted for unpaid taxes of the taxpayer for the year 1919 is barred by the provisions of sections 277(a)(2) and 278(d) of the Revenue Act*2425  of 1924.  The question is also governed by . The taxpayer's return for the year 1920 was filed March 15, 1921, and the statutory period for assessment against it for taxes for that year did not expire until March 15, 1926.  Section 250(d) of the Revenue Act of 1918 and section 277(a)(2) of the Revenue Act of 1924.  The additional tax of $4,601.72 asserted against the taxpayer for the year 1920 was assessed January 10, 1924, a date within the five-year period allowed by the statute for assessment.  The provisions of section 280(b)(1) of the Revenue Act of 1926, enacted February 26, 1926, extended the period of limitation for assessment of any liability of the petitioners, as transferees, for unpaid taxes of the taxpayer, one year after the expiration of the period of limitations for assessment against the taxpayer, or to March 15, 1927.  The deficiency notices were mailed to the petitioners on September 7, 1926, a date prior to the expiration of the statutory period for assessment against them.  The petitions instituting these proceedings were filed on November 4, 1926.  Section 280(d) of the Revenue Act of 1926 suspends the*2426  running of the period of assessment against transferees until the decision of the Board becomes final, and for 60 days thereafter.  Section 278(d) of the Revenue Act of 1926 reads, in part, as follows: Where the assessment of any income, excess-profits or war-profits tax imposed by this title or by prior Act of Congress has been made (whether before or after the enactment of this Act) within the statutory period of limitation properly applicable thereto, such taxes may be collected by distraint or by a proceeding in court (begun before or after the enactment of this Act), but only if begun (1) within six years after the assessment of the tax * * *.  *1297  This section of the Act is retroactive to taxes payable under the Revenue Act of 1918, and applies to the transferees.  . It follows that the period within which collection may be made from the transferees has not expired. The liability of each petitioner is $4,601.72, plus interest from February 26, 1926, at the rate of 6 per cent per annum.  *2427 . Judgment will be entered under Rule 50.