59 T.C. 441 (1972), 1426-69, Associates Investment Co. v. Commissioner of Internal Revenue

Docket Nº:1426-69.
Citation:59 T.C. 441
Opinion Judge:SIMPSON, Judge:
Party Name:ASSOCIATES INVESTMENT COMPANY, ALLEGED TRANSFEREE OF THE PROTECTIVE LIFE INSURANCE COMPANY, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
Attorney:William A. Cromartie, Patrick A. Heffernan, and Peter B. Freeman, for the petitioner. Rex A. Guest, for the respondent.
Judge Panel:DAWSON, J., concurring:
Case Date:December 20, 1972
Court:United States Tax Court
 
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Page 441

59 T.C. 441 (1972)

ASSOCIATES INVESTMENT COMPANY, ALLEGED TRANSFEREE OF THE PROTECTIVE LIFE INSURANCE COMPANY, PETITIONER

v.

COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

No. 1426-69.

United States Tax Court

December 20, 1972

William A. Cromartie, Patrick A. Heffernan, and Peter B. Freeman, for the petitioner.

Rex A. Guest, for the respondent.

Protective, a Nebraska corporation, was dissolved and during the 2-year period following its dissolution, its vice president executed consents which purported to extend the period for assessment of tax deficiencies for the years 1958 through 1962. The Nebraska Business Corporation Act, which is based on the Model Business Corporation Act, provides that upon dissolution, a corporation's existence ceases, except for certain limited purposes. Held, under Nebraska law, the execution of the consents during the post-dissolution period was authorized.

OPINION

SIMPSON, Judge:

The respondent determined that the petitioner was liable as transferee for deficiencies in the income tax of the Protective Life Insurance Co. as follows:

Year Deficiency

1958 $200,589.67

1959 156,645.21

1960 212,785.62

1961 338,490.63

1962 76,142.43

1966 471.28

The issues in this case have been severed, and the only issue to be decided herein is whether consents executed by an officer of Protective, subsequent to— but within 2 years after— its dissolution, were Page 442 valid and extended the period of limitations on assessments against Protective. All of the facts have been stipulated, and those facts are so found. Associates Investment Co., the petitioner, is a corporation which maintained its principal place of business in South Bend, Ind., at the time of filing its petition in this case. In 1962, the petitioner acquired all of the stock of the Protective Life Insurance Co. (Protective), a Nebraska corporation. On December 7, 1964, the board of directors of Protective adopted a plan of liquidation and dissolution, and the petitioner, as owner of all of the outstanding stock of Protective, executed a unanimous consent to the plan of liquidation of December 8, 1964. The plan provided that it was the intent of Protective to dissolve and that Protective would discontinue the active conduct of its business on December 17, 1964, and wind up its affairs. On March 31, 1966, Protective transferred all of its assets to the petitioner. A statement of intent to dissolve was filed with the secretary of state of Nebraska on April 13, 1966, and on April 14, 1966, such statement was recorded in Douglas County, Nebr. On April 21, 1966, Protective filed its articles of dissolution with the secretary of state of Nebraska, and the secretary issued a certificate of dissolution, which was recorded on April 22, 1966, in Douglas County, Nebr. Beginning on May 3, 1966, notice of Protective's dissolution was published once each week for 3 successive weeks in a legal newspaper printed in Omaha, Nebr. Protective had previously filed a Form 966 (corporate dissolution or liquidation) with the Internal Revenue Service on or about January 7, 1965. Attached to this form was a copy of Protective's plan of liquidation. Protective had also filed its 1964 Federal income tax return, on or about September 17, 1965, and attached to this return a statement that Protective had adopted a plan of liquidation and a copy of such plan. On or about August 17, 1966, Protective filed its final return, and this return included the statement that pursuant to the previously filed plan, Protective was liquidated on March 31, 1966. In 1961, the respondent commenced an audit of the Federal income tax returns of Protective for the years 1958 through 1960. The audit proceedings were suspended in 1964 pending the decision in Alinco Life Insurance Co. v. United States, 373 F.2d 336 (Ct. Cl. 1967). Both Alinco Life Insurance Co. and Protective were wholly owned subsidiaries of the petitioner, and the respondent and the representatives of Protective believed that the decision in the Alinco case might provide a basis for resolving the questions posed in a 10-day letter which had been sent to Protective in 1963 concerning its lax Page 443 liability for the years 1958 through 1960. While the outcome of the Alinco case was awaited, Mr. R. F. Lindquist, as vice president and comptroller of Protective, executed consents for the extension of the period for the assessment of income tax deficiencies against Protective. In 1963 and 1964, he executed consents with respect to the years 1958 through 1960; in 1965, he executed consents with respect to the years 1958 through 1961; in 1966, he executed consents purporting to extend the period of assessment until June 30, 1967, with respect to the years 1958 through 1962; and in 1967, he executed consents purporting to extend the period to December 31, 1967, with respect to the years 1958 through 1963. In the absence of the 1966 and 1967 consents, the period for assessment of income tax liabilities against Protective for the years 1958 through 1962 would have expired on or before June 30, 1967, and for the year 1963 on August 17, 1967. When Mr. Lindquist signed the consents in 1966 and 1967, he signed as vice president of Protective, but he was also vice president and comptroller of the petitioner. After the Alinco decision...

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