Bouchey v. Comm'r of Internal Revenue, Docket Nos. 32541

Citation19 T.C. 1078
Decision Date16 March 1953
Docket Number32542.,Docket Nos. 32541
PartiesIONE P. BOUCHEY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.HARMON N. BOUCHEY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
CourtUnited States Tax Court

OPINION TEXT STARTS HERE

Jack M. Harrison, Esq., for the petitioners.

Earl C. Crouter, Esq., for the respondent.

A deficiency was determined for 1945 after the normal 3-year statute of limitations based on adjustments from a net operating loss carry-back from 1947 and other adjustments to 1945 income. Petitioners contend that the part of the deficiency based on the latter adjustments is barred by the statute of limitations. Held, where taxpayers receive a refund by reason of a carry-back pursuant to section 3780, I.R.C., the period of limitations for assessment of deficiencies with respect to the earlier year is not enlarged by section 3780(c) or 276(d), I.R.C., except to the extent that the deficiency is based upon an error ‘attributable to the carry-back,‘ and other adjustments to 1945 are barred by limitations. Edward G. Leuthesser, 18 T.C. 1112, followed.

Respondent has determined deficiencies in income tax of petitioners, who are husband and wife, for the calendar year 1945 as follows:

+-------------------------------------------+
                ¦Petitioner       ¦Docket No.  ¦Deficiency  ¦
                +-----------------+------------+------------¦
                ¦Ione P. Bouchey  ¦32541       ¦$3,933.94   ¦
                +-----------------+------------+------------¦
                ¦Harmon N. Bouchey¦32542       ¦3,933.94    ¦
                +-------------------------------------------+
                

The cases have been consolidated.

Respondent made the adjustments to 1945 net income for each petitioner as follows:

+---------------------------------------------+
                ¦Net income as disclosed by return¦¦$20,743.21¦
                +---------------------------------++----------¦
                ¦Additional income:               ¦¦          ¦
                +---------------------------------------------+
                
(a) Net gain from the sale or exchange of capital assets
                increased                                                6,891.64
                (b) Interest income unreported                           385.00
                Total                                                    $28,019.85
                Decrease in income
                (c) Partnership income decreased              $1,213.07
                (d) Net operating loss deduction allowed      803.83
                                                                         2,016.90
                Net income adjusted                                      $26,002.95
                

Each petitioner pleads the statute of limitations in the same language, as follows:

(a) The Commissioner erred in that he has proposed a deficiency in federal income tax against petitioner for the taxable year 1945 after the expiration of 3 years from the date the petitioner's federal income tax return for 1945 was filed.

In his answer respondent has certain affirmative allegations, among which are the following:

(10) Under the provisions of section 3780, the Commissioner has the right to assess the amount of the tax shown in the computation attached to the deficiency notice and accompanying statement, without regard to the normal three-year statute of limitation; and the Commissioner, under section 3780 of the Internal Revenue Code, may thus recover any refund erroneously made on account of any tentative allowance of net operating loss carry-back.

(12) That the said deficiency for 1945 is not barred by the three-year statute of limitation, for other reasons: That the petitioner, in his said income tax return for said year, omitted and failed to report as gross income an amount which was properly includible therein and which was in excess of 25 per cent of the amount of gross income stated in the return, so that the tax may be assessed at any time within five years of March 15, 1946.

Petitioners do not contest the deficiencies on any other ground than the statute of limitations. In their brief they concede that $2,354.01 of the deficiency determined as to each petitioner is not barred by the statute of limitations. They contend that $1,579.93 of the deficiency as to each petitioner is the result of adjustments which are in no way attributable to the application to petitioners of a net operating loss carry-back and is barred by the normal 3-year statute of limitations.

FINDINGS OF FACT.

All of the facts have been stipulated and are found accordingly.

Petitioners reside at Lakeside, California, and filed the tax returns involved here with the collector of internal revenue for the sixth district of California. Petitioners are husband and wife and each claimed one-half community income. Each of the petitioners reported net income of $20,743.21 and tax liability of $8,003.50 in his original 1945 return. Neither petitioner in the 1945 income tax return claimed any deduction for a net operating loss.

Within 12 months from the end of the taxable year 1947 each petitioner made application to the Commissioner for a tentative carry-back adjustment of the 1945 income tax as affected by a net operating loss carry-back from the year 1947. The Commissioner subsequently determined the amount of $8,003.50 in each case as the decrease in 1945 Federal income tax attributable to the carry-back adjustment, upon the basis of each petitioner's application.

On March 11, 1949, each of the petitioners was assessed a deficiency of $4,069.56 in Federal income tax for the taxable year 1945 as the result of a revenue agent's examination of petitioners' Federal income tax returns for said year. The agent's examination resulted in the determination that each petitioner's net income for the taxable year 1945 amounted to $13,172.96, after the allowance of a net operating loss deduction for said year in the amount of $5,533.83 for Harmon N. Bouchey and $5,533.82 for Ione P. Bouchey (the result of a carry-back of a net operating loss claimed by the taxpayers for the taxable year 1947). In determining the amount of the 1945 deficiency assessed against the taxpayers on March 11, 1949, the agent made adjustments other than those pertaining to the net operating loss deduction.

By the Commissioner's notice of deficiency dated November 30, 1950, he proposes to reduce petitioners' net operating loss deduction for the taxable year 1945 from $5,533.83 to $803.83 in the case of Harmon N. Bouchey and from $5,533.82 to $803.83 in the case of Ione P. Bouchey. Petitioners do not contest the correctness of this adjustment in the net operating loss deduction carry-back from 1947 and concede that so much of the deficiency which is due thereto is within the applicable statute of limitations. But the petitioners do contend that the other adjustments made by the Commissioner which had nothing to do with the adjustment of petitioners' net operating loss deduction are barred by the normal 3-year statute of limitations and cannot now be assessed.

The deficiency notices were issued and the determinations therein were made after the expiration of the normal 3-year statute of limitations. No specific waivers or other exceptions with respect to the 3-year statute of limitations are involved except in connection with the adjustments of the net loss carry-back deduction from 1947.

OPINION.

BLACK, Judge:

This case raises the single question of whether part of the deficiency of $3,933.94 for 1945 is barred by the statute of limitations. A portion of the deficiency is conceded by petitioners to be timely assessed since it is attributable to adjustments to net operating loss deductions from the year 1947...

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19 cases
  • Pesch v. Comm'r of Internal Revenue
    • United States
    • United States Tax Court
    • 25 Enero 1982
    ...to the carryback. Jones v. Commissioner, 71 T.C. 391, 398-399; Maxcy v. Commissioner, 59 T.C. 716, 729-730; see Bouchey v. Commissioner, 19 T.C. 1078 (1953); Leuthesser v. Commissioner, 18 T.C. 1112, 1123-1126 (1952). 59. Pesch argues that the agreements which she executed only served to ex......
  • Maxcy v. Comm'r of Internal Revenue , Docket No. 870-71.
    • United States
    • United States Tax Court
    • 1 Marzo 1973
    ...adjustments only to the extent that such deficiencies were ‘attributable’ to the carryback. Sec. 6501(h); sec. 6213(b)(2); Ione P. Bouchey, 19 T.C. 1078 (1953); Edward G. Leuthesser, 18 T.C. 1112 (1952). Cf. Bunn's Auto Sales, Inc., 35 T.C. 861 (1961).12 Taxpayers were similarly limited in ......
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    • United States Tax Court
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    ...8491, 30 B. T. A. 231, 277-278 (1934). Petitioner's reliance on Edward G. Leuthesser Dec. 19,210, 18 T. C. 1112 (1952), Ione P. Bouchey Dec. 19,519, 19 T. C. 1078 (1953), and Deakman-Wells Co. v. Commissioner 54-2 USTC ¶ 9439, 213 F. 2d 894 (C. A. 3, 1954), is misplaced. All of those cases ......
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