Aeronca Mfg. Corp. v. Board of Tax Appeals
| Decision Date | 20 April 1966 |
| Docket Number | No. 39882,39882 |
| Citation | 6 Ohio St.2d 87,216 N.E.2d 46 |
| Parties | , 35 O.O.2d 120 AERONCA MANUFACTURING CORP., Appellant, v. BOARD OF TAX APPEALS et al., Appellees. |
| Court | Ohio Supreme Court |
Syllabus by the Court
Where the Director of Internal Revenue has received certain deposits in prepayment of income taxes for the tax year, as provided by law, from an Ohio corporation which, because of business losses during such business year, becomes entitled to the return of an undisputed part of such advance, a claim therefor is promptly filed at the close of the tax year, and the evidence is undisputed that the return of the overpayment will be made within a year of the demand, the amount thus due the taxpayer is an 'account receivable' under the provisions of Section 5701.07, Revised Code, and not 'other taxable intangibles'; the corporation should return such claim in its personal property tax return to the Ohio Tax Commissioner under schedule 9 of the form prescribed by the Tax Commissioner for that purpose as an account receivable. (Glidden Co. v. Glander, Tax Commr., 151 Ohio St. 344, 86 N.E.2d 1, 9 A.L.R.2d 515, distinguished.)
This cause comes to this court on appeal from a decision of the Board of Tax Appeals, affirming two final orders in companion cases before the Board of Tax Appeals, wherein the board in each case affirmed a final assessment certificate issued on August 4, 1964, by the Tax Commissioner of Ohio against Aeronca Manufacturing Corporation, appellant herein. The assessments are for personal property taxes of other 'taxable intangibles' claimed to be due from the appellant for each of the years of 1959 and 1960 in the amounts of $1,138.67 and $6,387.03, respectively.
The appellant is an Ohio corporation engaged in manufacturing airplane assemblies and miscellaneous commercial products, such company being located in the Middletown taxing district of Butler County. The Tax Commissioner of Ohio, in considering the appellant's personal property tax returns for 1960 and 1961, held that claims for refund of overlpaid income taxes due from the Bureau of Internal Revenue under the Internal Revenue Code (Section 6411, Title 26, U.S. Code) could not be returned as accounts receivable under Section 5701.07, Revised Code, it being held that such claims or 'rights' constituted 'other taxable intangibles.'
There is no dispute as to the facts upon which this determination was made. As a result of losses suffered in the operation of its business during the year 1959, this appellant became entitled to a refund of federal income taxes previously advanced in the amount of $379,556.84. The claim for this amount was filed with the Bureau of Internal Revenue in March of 1960 and, in making its personal property tax return for 1960, the appellant listed such claim under schedule 9 of the Corporation Return of Taxable Property as a 'current account receivable.'
Also for the year 1960, the appellant suffered losses that established the unchallenged right of the appellant to a return of previously paid income tax of $1,753,515.62. This amount, together with the amount of $379,556.84, returned as a refund claim in 1960, was returned under schedule 9 of its Personal Property Tax Return of 1961 as an account receivable under Section 5701.07, Revised Code.
The Tax Commissioner, in giving consideration to these personal property tax returns, held that the federal income tax which the appellant had overpaid and of which he was entitled to repayment should not have been reported as an account receivable under schedule 9 of the form for reporting corporation personal property for taxation purposes but should have been reported as 'other taxable intangibles' in schedule 10 of the form. The appellant filed an appeal to the Board of Tax Appeals as to each of the final assessments thus returned by the Tax Commissioner, as provided by Section 5717.02, Revised Code. Upon hearing, the Board of Tax Appeals affirmed the final assessments of the Tax Commissioner in each case, from which decision the appellant comes to this court claiming that the Board of Tax Appeals was in error in affirming such final assessment of the Tax Commissioner.
Cohen & Wolf and Robert L. Jordan, Cincinnati, for appellant.
William B. Saxbe, Atty. Gen., William M. Culbert and Edgar L. Lindley, Columbus, for appellees.
The only question presented by this appeal is one of law, that is, is the claim of a corporation for a refund of previously overpaid federal income taxes (there being no dispute as to the validity of such claims), in making its return to the Department of Taxation of Ohio of personal property for taxation purposes, to be returned as current accounts receivable or as 'other taxable intangibles' as defined in Section 5701.07, Revised Code?
Section 5701.07, Revised Code, reads:
'As used in Title LVII of the Revised Code:
'(A) 'Credits' means the excess of the sum of all current accounts receivable and prepaid items used in business when added together, estimating every such account and item at its true value in money, over and above the sum of current accounts payable of the business, other than taxes and assessments.
'(B) 'Current accounts' includes items receivable or payable on demand or within one year from the date of inception, however evidenced.
'(C) 'Prepaid items' does not include tangible property.
'The sum of current accounts payable shall not take into account an acknowledgment of indebtedness, unless founded on...
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