Eisenberg v. Commissioner

A. EISENBERG, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Eisenberg v. Commissioner Docket No. 12938. United States Board of Tax Appeals 11 B.T.A. 574; 1928 BTA LEXIS 3773; April 13, 1928, Promulgated *3773 A vendee paying in 1921 an excise tax imposed by section 902, Title IX, of the Revenue Act of 1918, upon the purchase of paintings, is not entitled to deduct from gross income in his income-tax return for 1921 the amount of the tax paid. John E. McClure, Esq., for the petitioner. John Marshall, Esq., for the respondent. SMITH *574 This is a proceeding for the redetermination of a deficiency in income tax for the year 1921 in the amount of $3,711.04. The respondent has increased the petitioner's net income by the amount of $7,215.45, which amount the petitioner paid as an excise tax under section 902 of the Revenue Act of 1918 upon the purchase of certain paintings during the year and which he claims constitutes a legal deduction from gross income for the taxable year under the provisions of section 214(a)(3) of the Revenue Act of 1921. FINDINGS OF FACT. The petitioner is a resident of Baltimore, Md. During the year 1921 he purchased certain oil paintings and paid at the time of purchase as a tax thereon $7,215.45 levied under section 902 of the Revenue Act of 1918, the purchases all having been made prior to June 30, 1921. He claimed*3774 the tax paid as a deduction from gross income in his income-tax return for 1921. The deduction was disallowed by the respondent in the determination of the deficiency. *575 OPINION. SMITH: Sections 902 and 903 of the Revenue Act of 1918 provide: Sec. 902. That there shall be levied, assessed, collected, and paid upon sculpture, paintings, statuary, art porcelains, and bronzes, sold by any person other than the artist, a tax equivalent to 10 per centum of the price for which so sold. This section shall not apply to the sale of any such article to an educational institution or public art museum. Sec. 903. That every person liable for any tax imposed by section 900, 902, or 906, shall make monthly returns under oath in duplicate and pay the taxes imposed by such sections to the collector for the district in which is located the principal palce of business. Such returns shall contain such information and be made at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulations prescribe. The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the collector at the time*3775 so fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. It is apparent that the taxes paid by the petitioner were imposed on slaes by the dealer and are payable by him. They are not imposed upon the purchaser. See Colgate & Co. v.United States, (Ct. Cls.), decided February 20, 1928. What the petitioner did in this case was simply to reimburse the dealer for an excise tax payable by him. Section 214(a)(3) of the Revenue Act of 1921 permits an individual to deduct from gross income certain taxes paid. But the taxes deductible are taxes imposed upon and paid by the taxpayer. Cf. ; National Bank of Commerce in ; ; *3776 ; . Judgment will be entered for the respondent.