Court Opinion

ID: 4499852
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:16:38.920928+00
Date Added: 2024-06-11T08:49:30.857560
License: Public Domain

*720ORIN I ON.
Love:
We will first dispose of the question of jurisdiction of the Board to redetermine the tax for 1918. The notice of deficiency states an overassesment for that year, but it shows a “ net additional tax ” for the three years 1917, 1918, and 1919, arrived at by deducting the amount of the 1918 overassessment from the sum of the deficiencies for the other two years. The petitioner urges that the Board may consider the tax liability for 1918 for the purpose of determining whether or not the overassessment should be greater *721than that determined by the Commissioner, since this would affect the net deficiency for the three years. It relies on Appeal of E. J. Barry, 1 B. T. A. 156, and certain other cases early decided by the Board. Since those decisions were rendered, the Revenue Act of 1926 was passed, which contains the following provision:
Sec. 274. (g) The Board in redetermining a deficiency in respect of any taxable year sliall consider such facts with relation to the taxes for other taxable years as may be necessary correctly to redetermine the amount of such deficiency, but in so doing shall have no jurisdiction to determine whether or not the tax for any other taxable year has been overpaid or underpaid.
Under this provision the Board has no jurisdiction to redetermine the tax for a year for which no deficiency has been found. See Appeal of Cornelius Cotton Mills, 4 B. T. A. 255. The petition is therefore dismissed as to the year 1918.
Until the latter part of 1917, the petitioner owned 39 shares, constituting 72.2 per cent of the outstanding stock of the Advance Button Co. The stipulation filed states the other 15 shares were “ issued to and stood in the names of” three individuals named. While this statement is vague as to ownership, we certainly can not find that ¡jetitioner then owned these shares. We conclude that 72.2 per cent is not “ substantially all,” so that affiliation can not rest on the ground of ownership by petitioner of substantially all of the stock. It further appears, however, that the three individuals referred to were employed by petitioner. Does this fact give petitioner control “ through closely affiliated interests ” of the remaining 15 shares not owned by it? We think not. It does not appear what positions Thompson, Hammond, and Yardley held, or that their holding of this stock had any relation to their employment by petitioner. An employer has not “ control ” of shares of stock held by an employee, by virtue of this relationship solely. See Appeal of Kiddy Shoe Service, Inc., 5 B. T. A. 268; Appeal of Goldstein Bros. Amusement Co., 3 B. T. A. 408. In the latter part of 1917 (date not shown), Thompson, Hammond, and Yardley “surrendered all right, title and interest” in their stock to petitioner. The circumstances or conditions of the surrender are not stated. The presumption is that petitioner thereupon became the owner of these shares. Therefore, from that time on, the two corporations were affiliated; but we can not determine they were affiliated during any part of 1917, for the date upon which the 15 shares were acquired by petitioner is not shown.
During 1919 petitioner still held all of the stock of the Advance Button Co., and hence was affiliated with it in that year.

Judgment twill be entered on 15 days' notice, under Rule 50.