St. Louis Mut. Life Ins. Co. v. Commissioner

ST. LOUIS MUTUAL LIFE INSURANCE COMPANY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. St. Louis Mut. Life Ins. Co. v. Commissioner Docket No. 61006. United States Board of Tax Appeals 30 B.T.A. 1319; 1934 BTA LEXIS 1183; July 31, 1934, Promulgated *1183 1. JURISDICTION - SECTIONS 1005(A) OF THE REVENUE ACT OF 1926 AND 1101(A) AND (B) OF THE REVENUE ACT OF 1932. - Where more than three months have elapsed since the entry of a decision of this Board but a motion was properly filed within that period to vacate such decision, held, the Board is not functus officio as to such motion and can vacate or modify such decision. 2. DEDUCTIONS. - LIFE INSURANCE COMPANIES. - Section 245(b) OF THE REVENUE ACT OF 1926. - Where life insurance company did not include in gross income for the taxable year the rental value of space in buildings owned and occupied by it, held, it is not entitled to deductions of taxes, expenses, and depreciation on such buildings under cited statutory provision, which is constitutional. Helvering v. Independent Life Ins. Co.,292 U.S. 371. 3. Id. - Held, it is not entitled to deduct depreciation on furniture and fixtures used in the underwriting activities of its business. Rockford Life Ins. Co. v. Commissioner,292 U.S. 382. Earl W. Shinn, Esq., for the petitioner. John D. Foley, Esq., James K. Polk, Jr., Esq., Walter W. Mahon, Esq.,*1184 and H. F. Noneman, Esq., for the respondent. LEECH *1319 OPINION. LEECH: This proceeding seeks redetermination of a deficiency of $1,127.51 asserted by respondent for the calendar year 1929. The facts are that petitioner, a life insurance company with home office at St. Louis, Missouri, owned at the close of the calendar year 1929, the building in which its home office was located, this building on that date having a cost of $112,500. For that year the rents from tenants amounted to $750, taxes paid amounted to $1,573.65, and the expense of operating and maintaining the building during the year was $5,555.30. A reasonable allowance for depreciation on this building for the year in question was $1,761.21. For that year petitioner did *1320 not include in income in its return any sum representing the rental value of office space which it used in this building. During the calendar year 1929 petitioner sustained depreciation on furniture and fixtures used in the investment department of its business in the sum of $217.95 and in the underwriting department of such business in the sum of $577.20. In computing the deficiency here appealed from*1185 respondent disallowed the deductions taken by petitioner representing depreciation on its home office building, the taxes paid on such building and the expense of operating the building as above set out. Furthermore, respondent allowed the deduction representing depreciation of petitioner's furniture and fixtures used in the investment department of its business, but disallowed the depreciation of $577.20 sustained upon furniture and fixtures of the underwriting department of such business. This proceeding was considered by us and a memorandum opinion entered September 21, 1933, holding upon authority of , and , that petitioner was entitled to the deduction asked for taxes, operating expenses, and depreciation with respect to its home office building and that on authority of , petitioner was entitled to the deduction of the depreciation sustained upon furniture and fixtures used in the underwriting department of its business. The decision under that opinion was entered December 9, 1933. *1186 On March 9, 1934, respondent filed a motion asking that the decision entered December 9, 1933, be vacated, the memorandum opinion entered be recalled, and that the proceeding be reconsidered by the full Board. Petitioner on March 19, 1934, filed its motion to strike respondent's motion. These two motions by respondent and petitioner were heard together on March 21, 1934, and taken under advisement. Petitioner's motion to strike is upon four grounds. The first is that the motion was filed too late, as it is shown to have been filed after 3:30 p.m. on March 9, 1934, whereas the decision of the Board must be considered as rendered at 9 a.m. on December 9, 1933, and consequently it became final not later than 9 a.m. on March 9, 1934. This contention requires little discussion. We do not agree with petitioner's theory that our decision entered upon a certain date must be considered as having been entered at 9 a.m. on that date. Respondent filed his motion on March 9, 1934, which was the last day of the period at the expiration of which the Board's decision would become final and the proceeding no longer be subject to our consideration. We hold that the motion in question*1187 was timely *1321 filed. Section 906(d) of the Revenue Act of 1924, as amended by section 1000 of the Revenue Act of 1926; cf. . The other three grounds asserted in petitioner's motion to strike, namely, that the motion was not seasonably filed; that it failed to allege legal grounds for the relief sought; and that it was dilatory, were not pressed, and, in any event, in our opinion, not sustained. The motion to strike is accordingly denied. Although neither party has raised it, the record suggests the question that, since the jurisdiction of the Board is wholly statutory and its control over its decisions thus limited to the period of three months following the entry thereof (sections 1101(a) and (b) of the Revenue Act of 1932) during which petitioners for their review may be filed (section 1005(a) of the Revenue Act of 1926), where, as here, more than three months have elapsed since entry of its decision though a motion for vacation thereof was properly filed within such three months, is the Board functus officio as to the motion to vacate such decision? So far as we know, the decisions of the courts uniformly support*1188 our negative answer to this query. (C.A., D.C.); (C.C.A., 4th Cir.); (C.C.A., 7th Cir.); cf. . Following the hearing upon respondent's motion for vacation and reconsideration and while that motion was under consideration by us, the United States Supreme Court, on May 21, 1934, handed down its decision in , reversing the decision of the , which had affirmed our decision in . By its decision the Supreme Court sustained the constitutionality of section 245(b) of the Revenue Act of 1926. It was held that insurance companies must include in income the rental value of space which they occupy in their own buildings as a condition of their right to deduct depreciation, taxes, and expenses in respect to such building. *1189 The Supreme Court also, on May 21, 1934, in , held an insurance company not entitled to deduct depreciation on furniture and fixtures used in the underwriting department of its business. This decision overrules our holding on this question in In view of the decision of the Supreme Court upon these questions it is apparent that the conclusions reached by us in the memorandum opinion entered herein on September 21, 1933, were in error. The decision entered herein December 9, 1933, is accordingly vacated and *1322 set aside and our memorandum opinion of September 21, 1933, is hereby recalled. We hold upon authority of , that petitioner is not entitled to the deductions claimed for taxes, operating expenses, and depreciation with respect to its home office building. We further hold, upon authority of , that petitioner is not entitled to the deduction sought of $577.20 as depreciation sustained upon furniture*1190 and fixtures used in the underwriting department of its business. Reviewed by the Board. Judgment will be entered under Rule 50.