Court Opinion

ID: 4599849
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:24:15.567434+00
Date Added: 2024-06-11T07:52:11.881864
License: Public Domain

CRUICKSHANK BROTHERS CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Cruickshank Bros. Co. v. CommissionerDocket No. 10703.United States Board of Tax Appeals11 B.T.A. 177; 1928 BTA LEXIS 3852; March 23, 1928, Promulgated *3852  Invested capital held to have been properly reduced by taxes of prior years.  James J. Dyer, C.P.A., for the petitioner.  J. G. Gibbs, Esq., for the respondent.  PHILLIPS *177  This proceeding is for a redetermination of deficiencies in income and profits taxes for the fiscal years ending August 31, 1919, and August 31, 1920, amounting to $7,110.38 and $2,513.96, respectively.  FINDINGS OF FACT.  Petitioner is a Pennsylvania corporation with principal office at Preble and Island Avenues, Pittsburgh.  It kept its accounts on the basis of a fiscal year ended August 31st.  Petitioner filed its income and profits-tax return for the calendar year 1917.  On March 15, 1919, it filed a tentative income and profits-tax return for the period from January 1, 1918, to August 31, 1918.  It filed its income and profits-tax return for that period on June 16, 1919.  It paid the tax for the said period in quarterly installments beginning with March 15, 1919.  The Commissioner, in computing petitioner's invested capital for the fiscal years ending August 31, 1919, and August 31, 1920, reduced the amount thereof by $35,443.93 and $77,352.67, respectively, *3853  on account of Federal income and profits taxes assessed on the net income of previous periods.  The Commissioner computed the respective amounts as follows: Fiscal year ended August 31, 1919.Federal income tax for the period ended Aug. 31, 1918, $92,968.53, prorated in accordance with Article 845(a) as follows:$46,484.27, prorated from Feb. 25, 191923,942.5823,242,13, prorated from May 15, 19196,940.8023,242.13, prorated from Aug. 15, 19191,082.5131,965.89Additional tax, 19173,478.0435,443.93Fiscal year ended August 31, 1920Preceding year's tax, 1919, $56,695.01, prorated$23,855.28Additional tax, 19173,478.041918 tax liability$92,968.701918 tax paid42,949.351918 tax unpaid, Sept. 1, 191950,019.3577,352.67*178  OPINION.  PHILLIPS: It is contended by petitioner that the additional tax of $3,478.04 for 1917 was not determined and assessed until November, 1919; that it did not become due and payable until such time, and that invested capital was therefore improperly reduced.  It would be sufficient to point out that there is no proof of the fact on which the question*3854  of law is based, namely, the date of assessment.  This question, however, has already been decided adversely to the contention of petitioner in a number of decisions based on ; 5 Am.Fed. Tax Rep. 5674, and ; 6 Am.Fed. Tax Rep. 6396. See , and cases cited; . The same situation applies to the reduction of invested capital for 1920 by the unpaid portion of the 1918 tax amounting to $50,019.35.  It was originally claimed that invested capital for 1920 was improperly reduced by the preceding year's tax, prorated from the date when payment became due, but it is now conceded that this adjustment is proper under section 1207 of the Revenue Act of 1926.  . The remaining question arises by virtue of the retroactive feature of the Revenue Act of 1918 which became a law on February 24, 1919.  This Act was retroactive to January 1, 1918.  It required that taxpayers who kept*3855  their accounts on a fiscal year basis should file their returns on that basis on or before the fifteenth day of the third month following the close of the fiscal year.  (Section 227(a)).  On this basis petitioner's return for the fiscal year ended August 31, 1918, was due November 15, 1918.  Since the law was not enacted until February 24, 1919, it was obviously impossible for petitioner to have filed its return earlier.  Under regulations issued by the Commissioner, the time for filing such returns was fixed at March 15, 1919.  The petitioner claims that under section 250(a) the first installment then became due on March 15, 1919, and the remaining three installments at intervals of three months and urges that the Commissioner erred in determining that one-half of the tax should be deducted from invested capital as of February 25, 1919, one-fourth as of May 15, 1919, and one-fourth as of August 15, 1919.  Section 250(a) of the 1918 Act provided: Where an extension of time for filing a return is granted the time for payment of the first installment shall be postponed until the date of expiration of the period of the extension, but the time for payment of the other installments*3856  shall not be postponed unless the Commissioner so provides in granting the extension.  *179  It does not appear that any extension of time for the payment of these taxes was granted this petitioner.  We are therefore of the opinion that the petitioner's claim is without merit.  In , the Circuit Court of Appeals, First Circuit, had a similar question which arose because of the retroactive feature of the Revenue Act of 1917.  While the situation presented here may vary in some degree because of the more explicit terms of the 1918 Act, the reasoning of the opinion of the court is applicable and would lead to the result which we have reached here.  Decision will be entered for the respondent.