Farmers & Merchants Bank of Platte v. United States, 561.

• Decision Date: 02 March 1949
• Docket Number: No. 561.,561.
• Citation: 85 F. Supp. 722
• Court: U.S. District Court — District of South Dakota
• Parties: FARMERS & MERCHANTS BANK OF PLATTE v. UNITED STATES.

85 F. Supp. 722

FARMERS & MERCHANTS BANK OF PLATTE v. UNITED STATES.

No. 561.

United States District Court D. South Dakota.

March 2, 1949.

Bailey, Voorhees, Woods & Fuller, of Sioux Falls, South Dakota, for plaintiff.

Leo P. Flynn, United States Attorney, and Matthew A. Brown and George A. Bangs, Assistant United States Attorneys, all of Sioux Falls, South Dakota, for defendant.

WYMAN, District Judge.

The outcome of the above entitled controversy depends upon the effect to be given to plaintiff's answer to question (e) in its income and excess profits tax return for the year 1942.

It is undisputed that the return as submitted by plaintiff shows that said question (e) was answered "yes". It is the contention of the plaintiff that the answer appearing in the return was an inadvertent or typographical error and that the answer should have been "no" in accordance with the purpose and intent of the taxpayer.

The government contends that the taxpayer by submitting the return wherein the question was answered in the affirmative thereby exercised an election and that having done so the same is binding and conclusive.

If the assumption of the government to the effect that by submitting the return the taxpayer actually exercised an election, the conclusion as to its being of binding and conclusive effect is manifestly correct. But it is the contention of the taxpayer that it was its purpose and intent to answer the question "no", and that it was so answered on the work sheet or original draft of the return, and that the answer "yes" appearing in the return as submitted is an inadvertent and typographical error. If this contention is correct then the taxpayer, in fact, never exercised the election indicated by the return.

The evidence as to the purpose and intent of the taxpayer stands undisputed and is supported by the answer to the question (e) as it appears in the work sheet or original draft of the return, and the further fact that the calculation of the tax as shown by the return in omitting the inclusion of the income involved is inconsistent with the answer "yes" and is entirely consistent with the taxpayer's contention that its purpose and intent was to answer said question "no".

In view of the record I am convinced that the taxpayer never intended to and, in fact, never did make the election indicated by the answer in the return. In my opinion the authorities cited by the government in its brief are to be distinguished from the instant case in that in each of the cases cited the taxpayer had intentionally exercised an election and sought relief from the consequences thereof on the ground that the election was made under a lack of knowledge or proper understanding of the law.

In my opinion the evidence shows conclusively that it was the purpose and intent of the taxpayer to exercise an election directly contrary to that indicated by the inadvertent and erroneous answer in question (2) in the return and that plaintiff is clearly and equitably entitled to the relief prayed for.

It follows that the decision must be in favor of the plaintiff and upon submission of proper Findings of Fact, Conclusions of Law and Judgment in accordance with the foregoing the same will be signed and entered of record.

This action coming regularly on to be tried before the Court, trial by jury having been waived, the plaintiff appearing by M. T. Woods,...