Court Opinion

ID: 4595111
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:14:21.746646+00
Date Added: 2024-06-11T07:51:22.727254
License: Public Domain

G. H. CONNELL, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Connell v. CommissionerDocket No. 18405.United States Board of Tax Appeals15 B.T.A. 1309; 1929 BTA LEXIS 2688; April 9, 1929, Promulgated *2688  Where a jeopardy assessment is made under the provisions of section 279(a) of the Revenue Act of 1926, before notice has been given under the provisions of section 274(a), such assessment must be followed by notice, as prescribed by section 274(a), within 60 days after the making of the assessment, in order that its collection may be made after the expiration of such 60 days.  J. H. Reese,15 B.T.A. 1261">15 B.T.A. 1261, followed.  W. A. Bolinger, Esq., for the petitioner.  T. M. Mather, Esq., for the respondent.  LITTLETON*1309  This proceeding involves a deficiency in income tax for 1920 in the amount of $7,724.87, a jeopardy assessment which was made under the provisions of section 279(a) of the Revenue Act of 1926.  The question to be decided is whether the failure of the Commissioner to notify the petitioner within 60 days after making such assessment, as provided in section 279(b), makes such assessment ineffective and thus bars the collection of the tax, the five-year statutory period for the assessment of tax under the return in question having run.  FINDINGS OF FACT.  The petitioner is an individual with residence at Fort Worth, *2689 Tex., and filed his income-tax return on or before March 15, 1921.  The following facts were stipulated with respect to the making of the assessment: The deficiency of $7,724.87 against the petitioner for the year 1920, as alleged by the Commissioner of Internal Revenue, was actually assessed by the Commissioner as a jeopardy assessment under the provisions of Section 279(a) of the Revenue Act of 1926 on March 13, 1926.  Prior to the making of said jeopardy assessment on March 13, 1926, no notice with respect to the tax to which the jeopardy assessment related had been *1310  mailed to the petitioner under subdivision (a) of section 274 of the Revenue Act of 1926.  On May 13, 1926, the 61st day after the Commissioner made the jeopardy assessment, the notice referred to in paragraph 2 of the petitioner's petition was mailed to the petitioner which notice complied in all respects with the notice prescribed by subdivision (b) of Section 279 of the Revenue Act of 1926 save and except that it was not mailed within 60 days from the date of making of the jeopardy assessment.  More than five years have elapsed since the petitioner filed his return for the year 1920.  The*2690  said jeopardy assessment of March 13, 1926 and the said notice of May 13, 1926, constitute the only attempt made by the Commissioner of Internal Revenue as a compliance with either the provisions of Sectiuon 274(a) or Section 279(a) and (b) of the Revenue Act of 1926 with respect to the deficiency now asserted by him.  The additional fact is admitted in the answer of the Commissioner that: On or about March 20, 1926, the Collector of Internal Revenue at Austin, Texas, served a notice and demand on the petitioner for payment of the additional tax assessed in the amount of $7,724.87, together with interest in the amount of $30.90, whereupon the petitioner filed bond and obtained stay of collection, as provided for by Subdivision (f) of Section 279 of the 1926 Revenue Act.  The following statement appears in the deficiency notice in explanation of the making of the jeopardy assessment: Since the statutory period for making assessments for the year 1920 was about to expire it was necessary to make immediate assessment under the provisions of Section 279 of the Revenue Act of 1926.  The sixtieth day after March 13, 1926, or May 12, 1926, fell on Wednesday.  In the event the*2691  jeopardy assessment and notice referred to above are held to be sufficient compliance with the statute in those respects, it is agreed that the deficiency may be determined on the basis of the following facts: The petitioner, G. H. Connell, and his wife, were living together during the year 1920 (the marital relationship never having been interrupted) and in due time elected to file and did file separate returns for the year 1920, wherein each included in his and her respective return one-half of the total community income as computed by them.  As community owners of $725 shares of stock of the Reese Corriher Lumber Company, a corporation, the petitioner and his wife received community income from the liquidation and distribution of that corporation's assets during the year 1920 in the net amount (after taking into consideration subsequent taxes paid and to be paid for the dissolved corporation) of $26,593.00, which amount was not included in their community income as reported on their returns.  In making the jeopardy assessment as of March 13, 1926, against the petitioner, the Commissioner of Internal Revenue proceeded on the basis that the amount of the understatement of the*2692  community income reported by the petitioner and his wife had been $89,991.77, whereas it is now agreed that the amount of said understatement was only $26,593.00.  *1311  On the basis of adding one-half of the amount of the understatement of the community income, to wit, (1/2 of $26,593.00) or $13,296.50 to the petitioner's net income, the amount of the deficiency due from the petitioner (if not otherwise barred for reasons appearing in this stipulation) is $1,850.37, as compared with the deficiency of $7,724.87 asserted by the Commissioner of Internal Revenue in the notice dated May 13, 1926.  OPINION.  LITTLETON: The decision in this proceeding is controlled by , in which similar facts and the same question were involved.  Judgment will be entered for the petitioner.