Aramo-Stiftung v. Commissioner of Internal Revenue, 48
| Decision Date | 10 March 1949 |
| Docket Number | No. 48,Docket 21033.,48 |
| Citation | 172 F.2d 896 |
| Parties | ARAMO-STIFTUNG v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Second Circuit |
Monroe Collenburg, of New York City (Hardin, Hess & Eder, of New York City, of counsel), for petitioner.
Theron Lamar Caudle, of Washington, D. C. (Ellis N. Slack, Helen Goodner, and Louise Foster, all of Washington, D. C., of counsel), for the Commissioner.
Before AUGUSTUS N. HAND, CHASE, and FRANK, Circuit Judges.
There are two questions presented by this appeal. The first is whether certain dividends received by brokerage houses during the tax years 1940-1943 were constructively received by, and thus taxable to, the petitioner in those years. The second (which we reach only because we agree with the Tax Court that the first question must be answered "yes") is whether the petitioner may deduct, in determining its income subject to personal holding company surtax for each of those years, income taxes accrued but not paid during that year.
The facts are fully stated in the opinion of the Tax Court, 9 T.C. 947. For the purposes of this opinion, the following is a sufficient summary:
The petitioner, Aramo-Stiftung, is a foundation organized under the laws of the principality of Leichtenstein. During the years in question it was the beneficial owner of certain stocks issued by American corporations. The securities, registered in the names of the brokers or their nominees, were kept in a safe deposit box rented by the Oak Commercial Corporation, a New York corporation organized, so far as appears, solely for the purpose of acting as custodian of the securities.
Dividends were paid by the issuing corporations to the brokers as registered owners, and the brokers retained them as unclaimed funds. In July, 1945, petitioner advised the brokers that it was the owner of the securities, requested them to pay the income taxes due for the years 1940 through 1945, and asked them to transfer the balance to accounts in petitioner's name. All of the brokers refused, asking more satisfactory evidence of petitioner's ownership of the securities and, in some cases, requesting guarantees against possible conflicting claims and stating that a Treasury license would be necessary.
The Commissioner determined that petitioner was subject to federal income tax, personal holding company surtax, and penalties on the dividends, on the theory that the petitioner had constructively received them. The doctrine of constructive receipt applies where income is ...
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