First Bond & Mortgage Co. v. Commissioner of Internal Revenue

• Decision Date: 13 October 1930
• Docket Number: Docket No. 40373.
• Citation: 21 BTA 1
• Parties: FIRST BOND & MORTGAGE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

21 B.T.A. 1 (1930)

FIRST BOND & MORTGAGE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 40373.

Board of Tax Appeals.

Promulgated October 13, 1930.

Dean G. Acheson, Esq., for the petitioner.

A. H. Murray, Esq., and Stanley B. Pierson, Esq., for the respondent.

OPINION.

MURDOCK:

The Commissioner determined deficiencies in the petitioner's income tax for 1924, 1925, and 1926, but, for reasons hereinafter set forth, it will not be necessary to discuss the errors alleged in the petition and the facts relating thereto.

The petitioner was incorporated under the laws of Delaware on November 10, 1919, and was legally dissolved on February 9, 1925. J. I. Van Keuren was at that time made a trustee for the purpose of liquidation of the corporation.

On June 25, 1928, the Commissioner mailed the deficiency notice to the petitioner corporation. On August 21, 1928, more than three years after the corporation was dissolved, this petition was filed with the Board. It was signed by Dean Acheson, as counsel, and verified by J. I. Van Keuren, under date of July 25, 1928, purporting to be the president of the First Bond & Mortage Co. and as such duly authorized to verify the petition. The following allegation appears in this petition and was denied in the answer:

On January 29, 1925 the taxpayer by resolutions of the stockholders voted to wind-up, dissolve and terminate the existence of the corporation. That immediately thereafter it surrendered its charter to the State of Delaware and with drew its privilege for doing business in the State of Michigan and that it ceased to do business and turned its assets over to trustees to liquidate same for the stockholders. * * *

The issue on the merits was as to the propriety of deducting certain organization expenses from income because of the fact that the corporation had dissolved and had commenced liquidation.

The question of the Board's jurisdiction was raised at the hearing and both parties had an opportunity to be heard and to present such evidence as they desired. An opportunity to file briefs was granted, but no briefs were filed. Perhaps the failure to file briefs was due to the fact that counsel were convinced of our lack of jurisdiction.

It has frequently been held that when a corporation is dissolved, it is dead, and any prolongation of its existence, even for purposes of litigation, is entirely dependent upon statutory authority. Oklahoma Natural Gas Co. v. Oklahoma, 273 U. S. 257. The laws of Delaware in effect at the time of the dissolution of this corporation, and under which it was dissolved, provided that all corporations should be continued for three years after dissolution for the purpose of prosecuting and defending suits and winding up their affairs, but not for the purpose of continuing business. The law further provided, that the directors should be trustees to wind up its affairs and to sue and be sued as trustees...