Aiken v. Commissioner of Internal Revenue, Docket No. 21513.
| Decision Date | 07 February 1928 |
| Docket Number | Docket No. 21513. |
| Parties | FRIEND M. AIKEN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Claude Collard, C. P. A., M. M. Mahany, Esq., and L. E. Cahill, Esq., for the petitioner.
T. M. Mather, Esq., for the respondent.
This proceeding involves the redetermination of deficiencies in petitioner's income and profits tax for the year 1917, and in his income taxes for the years 1918, 1919, and 1920. Respondent determined the following deficiencies: for the year 1917, $51,614.09, for the year 1918, $986.30, and for the year 1920, $29,249.86; and for the year 1919 he determined an overassessment of $5,120.24. Petitioner alleges that respondent committed the following errors:
(1) Error in computing net income for the year 1920 by reason of not determining the true amount of liquidating dividend from the Admiralty Zinc Co.
(2) Error in computing net income for the year 1917 in failing to determine the true amount of liquidating dividends from the Queen Esther Mining Co.
(3) Error in computing net income for the years 1917, 1918, and 1920 in failing to determine the true amount of liquidating dividends from the Cushing Gasoline Co.
(4) Error in determining that taxable gain was realized in the year 1917 from the sale of shares of stock of the Peerless Refining Co.
(5) Error in including in income for the years 1917, 1918, and 1920 income from restricted Indian lands.
(6) Error in refusal to allow as a deduction from gross income for 1917 an adequate salary to petitioner.
(7) Respondent was without authority to make, on March 12, 1925, a jeopardy assessment of any war income or war excess-profits taxes for the year 1917, because such right was then barred by the statute of limitations.
(8) Respondent was without authority to make a jeopardy assessment on March 12, 1925, of any normal tax or additional tax for the year 1917 sought to be imposed under the Revenue Act of 1916, as amended by the Revenue Act of 1917, because such right was then barred by the statute of limitations.
(9) Respondent now is and since April 1, 1923, has been without authority to collect any taxes imposed under the Revenue Act of October 3, 1917, for war income or war excess-profits taxes, such right being barred by the statute of limitations.
(10) Respondent now is and since April 1, 1923, has been without authority to collect any normal or additional tax for the year 1917 sought to be imposed under the Revenue Act of September 8, 1916, as amended by the Revenue Act of October 3, 1917, such right being barred by the statute of limitations.
(11) The respondent now is and since April 28, 1925, has been without authority to collect any taxes sought to be imposed under the Revenue Act of 1918, such right being barred by the statute of limitations.
Petitioner, at the hearing, waived error (6) and introduced no evidence to sustain errors (1), (2), (3), and (5). This proceeding, in so far as it involves taxes for the year 1919, was dismissed at the hearing. The parties stipulated that the deficiency for the year 1920 was $29,249.86.
FINDINGS OF FACT.
Petitioner is a resident citizen of the United States, and was, during the years 1917, 1918, 1919, and 1920, engaged in business with his principal offices located at Tulsa, Okla.
Petitioner filed an income and profits-tax return for the year 1917 with the collector on March 30, 1918. On March 18, 1919, petitioner filed with the collector a tentative income-tax return for the year 1918, and on April 28, 1919, he filed with the collector his complete return for said year.
On February 5, 1921, petitioner executed the following instrument in writing:
WAIVER (Individual)
I, Friend M. Aiken, in consideration of the assurance given me by officials in the Income Tax Unit of the Bureau of Internal Revenue that my liability for all Federal taxes imposed by the Act of Congress, approved September 8, 1916, as amended by the Act of Congress approved October 3, 1917, for the year ended December 31, 1917, on my net income received from all sources in said year, shall not be determined except after deliberate, intensive and thorough consideration, hereby waive any and all statutory limitations as to the time within which assessments based upon such liability may be entered. It is understood, however, that I do not, by the execution of this waiver, admit in advance the correctness of any assessment which may be made against me for said year by the officials of the Income Tax Unit.
(Signed) FRIEND M. AIKEN by E. F. BLAISE Attorney-in-fact.
Taxpayer.
The above instrument was filed with respondent on February 7, 1921, and now bears on its face the following notation:
Approved D. H. Blair, Commissioner of Internal Revenue, Date Nov. 29, 1922.
On March 3, 1924, petitioner executed an instrument in writing, which was thereafter executed by respondent and which reads:
MARCH 3, 1924.
INCOME AND PROFITS TAX WAIVER.
In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Friend M. Aiken, of Tulsa, Oklahoma, and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said individual for the years 1917 and 1918 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes" approved August 5, 1909. This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by any waivers already on file with the Bureau, within which assessments of taxes may be made for the year or years mentioned.
(Signed) FRIEND M. AIKEN Taxpayer. By ______ ______ (Signed) D. H. BLAIR Commissioner.
Under date of February 16, 1925, petitioner executed the following instrument in writing and thereafter delivered it to respondent:
FEBRUARY 16, 1925.
INCOME AND PROFITS TAX WAIVER
(For taxable years ended prior to March 1, 1921.)
In pursuance of the provisions of existing Internal Revenue Laws, F. M. Aiken, a taxpayer of Tulsa, Oklahoma, and the Commissioner of Internal Revenue hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year 1917 under existing revenue acts, or under prior revenue acts. This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1925, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.
(Signed) F. M. AIKEN by E. F. BLAISE, Atty.-in-Fact.
Taxpayer.
This instrument is stamped on its face "Received Mar. 2, 1925 Service Division." It was not executed by respondent and bears the further notation in writing "not acceptable."
On February 16, 1925, petitioner executed the following instrument in writing and thereafter delivered it to respondent:
FEBRUARY 16, 1925.
INCOME AND PROFITS TAX WAIVER
(For taxable years ended prior to March 1, 1921.)
In pursuance of the provisions of existing Internal Revenue Laws F. M. Aiken, a taxpayer, of Tulsa, Oklahoma, and the Commissioner of Internal Revenue hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year 1918 under existing revenue acts, or under prior revenue acts. This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1925, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.
(Signed) F. M. AIKEN by E. F. BLAISE, Atty.-in-Fact.
Taxpayer.
This instrument was not executed by respondent. Stamped on its face is the notation "Received Mar. 2, 1925, Service Division."
On March 12, 1925, respondent made a jeopardy assessment against petitioner covering the calendar year 1917, in the amount of $70,740.88. On the same day respondent made a jeopardy assessment against petitioner covering the calendar year 1918 in the amount of $29,739.39. Within 10 days after notice and demand on both the above jeopardy assessments, petitioner filed with the collector claims in abatement covering both said assessments. The claims were not accompanied by bonds.
On February 5, 1926, petitioner executed an instrument in writing, which was thereafter executed by respondent, and which reads:
INCOME AND PROFITS TAX WAIVER
For taxable years ended prior to Jan. 1, 1922
FEBRUARY 5, 1926.
In pursuance of the provisions of existing Internal Revenue Laws FRIEND M. AIKEN, taxpayer of Tulsa, Oklahoma, and the Commissioner of Internal Revenue hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or war-profits taxes due under any return made by or on...
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