353 F.2d 814 (8th Cir. 1965), 18064, Vinal v. Peterson Mortuary, Inc.

Docket Nº:18064.
Citation:353 F.2d 814
Party Name:Richard P. VINAL and United States of America, Appellants, v. PETERSON MORTUARY, INC., Appellee.
Case Date:December 30, 1965
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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353 F.2d 814 (8th Cir. 1965)

Richard P. VINAL and United States of America, Appellants,



No. 18064.

United States, Court of Appeals Eighth Circuit.

December 30, 1965

Robert A. Bernstein, Attorney, Tax Division, Dept. of Justice, Washington, D.C., John B. Jones, Jr., Acting Asst. Atty. Gen., and Lee A. Jackson, David O. Walter, Attorneys, Tax Div., Washington, D.C., and Theodore L. Richling, U.S. Atty., and Russel J. Blumenthal, Asst. U.S. Atty., Omaha, Neb., for appellants.

Eugene P. Welch, of Gross, Welch, Vinardi, Kauffman & Schatz, Omaha, Neb., for appellee.

Before VAN OOSTERHOUT and MEHAFFY, Circuit Judges, and VAN PELT, District Judge.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal by Richard P. Vinal, District Director of Internal Revenue for Nebraska, and the United States from final judgment of the district court allowing taxpayer Peterson Mortuary, inc., its claim for refund of excise taxes paid by it and denying the supplemental complaint in intervention filed by the United

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States for additional excise taxes arising out of the same transactions involved in the refund suit. The trial court's opinion is reported at 238 F.Supp. 346. Timely claim for refund of the taxes has been made. Jurisdiction exists in the trial court under 28 U.S.C.A. § 1340 and in this court under 28 U.S.C.A. § 1291.

Taxpayer is a Nebraska corporation engaged in the business of conducting funerals. The excise tax controversy arises out of the purchase by the taxpayer of two standard Chrysler automobiles from a local Nebraska dealer, title to each of which was taken in the taxpayer. Immediately after the purchases, taxpayer entered into contracts with Memphis Coach Company of Memphis, Tennessee, for the conversion of one of the automobiles into an ambulance and the other into a hearse. Such contracts called for extensive body changes involving the substitution of practically entirely new bodies. Memphis Coach furnished all the labor and materials, needed to effect the conversion for an agreed price of $1870.25 for the ambulance and $4194.00 for the hearse. No manufacturer's excise tax has been paid by or assessed to Memphis Coach in respect to the work here involved. Memphis Coach is no longer in business, having been adjudged a bankrupt.

On July 30, 1962, taxpayer at the urging of the Government filed quarterly excise tax returns covering the foregoing transactions, making payment as follows:

First Quarter 1959 (ambulance) Excise Tax .. $177.03 Interest ...... 34.52 Penalty ....... 44.26 First Quarter 1960 Excise Tax ... 399.40 (hearse) Interest ...... 53.92 Penalty ....... 99.85

On June 28, 1963, subsequent to the commencement of the refund suit, the Commissioner assessed additional excise taxes and interest on the two transactions here involved in the amount of $434.37. He abated the penalty previously assessed and paid, leaving a balance due, after crediting the penalty, of $290.26. 1 The record does not show the basis upon which such assessment was made.

On September 11, 1964, the Commissioner assessed with respect to the same transactions further excise tax in the amount of $628.49. The basis of the additional assessment is stated as follows:

Ambulance Hearse 3. Total cost 13,007.25 5,370.25 7,637.00 --------- --------- -------- 1. Cost of units converted 6,943.00 3,500.00 3,443.00 2. Add: Cost of conversion 6,064.25 1,870.25 4,194.00 --------- --------- -------- 5. Total: Constructive price 14,307.98 5,907.28 8,400.70 6. Federal excise tax, corrected 1,430.80 590.73 840.07 Total 3/31/59 3/31/60 4. Add 10% profit 1,300.73 537.03 763.70

It is the Government's claim that if the tax and interest previously paid is credited and the penalty paid is abated, and additional interest is added, the balance of the excise tax and interest owing is $918.75.

The tax statutes most pertinent to this appeal are §§ 4061 and 4218, I.R.C.1954,

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26 U.S.C.A. §§ 4061, and 4218. Section 4061 establishes a manufacturer's excise tax on the sale of automobiles and provides that 'a sale of an automobile * * * shall * * * be considered to be a sale of the chassis and of the body.' Section 4218 provides that a person who manufactures an article subject to excise tax and uses it himself 'shall be liable for tax under this chapter in the same manner as if such article was sold by him.'


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