American Locker Co. v. Commissioner

AMERICAN LOCKER CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. American Locker Co. v. Commissioner Docket No. 34372. United States Board of Tax Appeals 21 B.T.A. 408; 1930 BTA LEXIS 1854; November 21, 1930, Promulgated *1854 The statutory period of limitations provided in section 280(b)(1) of the Revenue Act of 1926 had expired before the mailing of the notice of the deficiency to the transferee. Harry Freidman, Esq., and Chauncey Lobingier, Esq., for the petitioner. W. L. Hart, Esq., and J. E. Mather, Esq., for the respondent. MURDOCK *408 The Commissioner notified the petitioner that in accordance with section 280 of the Revenue Act of 1926, he proposed to assess against it $3,355.02 as its liability as transferee of the assets of the Central Coin Controlled Locker Co. for unpaid income tax in this amount due from that corporation for the year 1921. The petitioner contends that section 280 of the Revenue Act of 1926 is unconstitutional, and that there is no liability at law or in equity on its part to pay any taxes assessed against the Central Coin Controlled Locker Co. and that the alleged liability is barred by statute of limitations. FINDINGS OF FACT. The Central Coin Controlled Locker Co. was an Illinois corporation incorporated February 10, 1913, with its principal office at Belvidere, Ill. *409 The American Locker Co. is a Delaware*1855 corporation having its principal office at Pittsburgh, Pa. The Central Coin Controlled Locker Co. was dissolved on November 24, 1922, its assets and property of the total value of $90,318.93 were distributed to its stockholders in proportion to their respective holdings, and the American Locker Co. of Delaware, owning 1,908 shares out of 1,915 total outstanding shares, received 1908/1915 of said assets on September 15, 1922. The Central Coin Controlled Locker Co. filed a corporation income and profits-tax return for the calendar year 1921 on July 12, 1922, showing no tax due. On February 2, 1926, the Commissioner mailed a deficiency notice to the Central Coin Controlled Locker Co., Belvidere, Ill., under section 274(a) of the Revenue Act of 1924, stating that he had determined a deficiency in its income-tax liability for the year 1921 in the amount of $3,355.02. This notice was returned unopened to the Commissioner on or about February 11, 1926, and no petition was ever filed with this Board by that taxpayer. On April 6, 1926, the Commissioner assessed a tax of $3,355.02 against the Central Coin Controlled Locker Co. of Belvidere, Ill., for the calendar year 1921, which*1856 amount he charged to the collector of the first district of Illinois. On November 29, 1927, the Commissioner mailed a notice to the petitioner, stating: As provided in Section 280 of the Revenue Act of 1926, there is proposed for assessment against you the amount of $3,355.02 constituting your liability as transferee of the assets of the Central Coin Controlled Locker Company, formerly of Beividere, Illinois, for unpaid income tax in the amount of $3,355.02 due from said corporation for the year 1921, plus any accrued penalty and interest, as per the attached statement. The records of the office of the collector of internal revenue for the first district of Illinois, show in regard to the accounts of the Central Coin Controlled Locker Co., Belvidere, Ill., in respect to income tax for the calendar year 1921, as follows: 1. Taxable 2. List and 3. Acct. 4. Amount 5. Date 6. Amount 7. Paid Period Year No. or Page Assessed or Sched- Ab. Cr and Line or Sched- 3. [1921] Addi. 1921 1926 Mar. 46C NC 861706 23-C dated 3355.02 Tr. to 3355.02 5/7/26 Pittsburgh 3-8-27. 8. Adjust of*1857 Overassessments 3. *410 OPINION. MURDOCK: The petitioner can not successfully contend before this Board that section 280 of the Revenue Act of 1926 is unconstitutional. . See also ; . The original taxpayer filed its return on July 12, 1922. The four-year period for assessment of any additional taxes against this taxpayer would have expired on July 12, 1926. Sec. 277(a), Revenue Acts of 1924 and 1926. However, a deficiency notice was mailed to the taxpayer on February 2, 1926, and this fact served to suspend the running of the four-year period for assessment above mentioned. Secs. 274 and 277(b), Revenue Acts of 1924 and 1926; sec. 283(c), Revenue Act of 1926. The Commissioner assessed the taxes in controversy on April 6, 1926. He had a right to make an assessment on that day if he believed assessment would be jeopardized by delay. Sec. 279(a), Revenue Act of 1926. No claim is made that this assessment was improper, and the record would not support such a claim if made. We assume that this*1858 act of the Commissioner was regular and valid. Cf. ; ; , in effect affirmed in ; . Section 277(b) of the Revenue Act of 1926 suspends the running of the statute of limitation for the period during which the Commissioner was prohibited from making the assessment and for sixty days thereafter. There is nothing in the legislative history of this section, in the reasons for the provision, or in the language used to justify a holding that the period during which the Commissioner was prohibited from making the assessment extended beyond April 6, 1926, the date on which he actually made a valid assessment. Thus, the running of the four-year period of limitation on assessment was suspended not longer than from February 2, 1926, the day on which the deficiency notice was mailed, until sixty days after April 6, 1926, or 123 days, and instead of the period expiring on July 12, 1926, it expired not later than November 12, 1926. The transferee notice*1859 of deficiency to the petitioner in this case, mailed on November 29, 1927, was not mailed within one year after the expiration of the period of limitation for assessment against the taxpayer, and the statute of limitations provided in section 280(b)(1) of the Revenue Act of 1926 bars assessment of this tax against the petitioner. Reviewed by the Board. Judgment will be entered for the petitioner.