Atlas Oil & Refining Corp. v. Comm'r of Internal Revenue
| Decision Date | 14 June 1954 |
| Docket Number | 40930.,Dockets Nos. 40929 |
| Citation | 22 T.C. 552 |
| Parties | ATLAS OIL AND REFINING CORPORATION, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
1. Although petitioner kept books on a calendar year basis it filed returns for the fiscal years ended November 30, 1942, 1943, and 1944. Held, such returns were sufficient to start the running of the statute of limitations against assessment with respect to the 2 calendar years (1942 and 1943) which were full embraced within those fiscal years. Mabel Elevator Co., 2 B. T. A. 517; Paso Robles Mercantile Co., 12 B. T. A. 750,affirmed33 F. 2d 653 (C. A. 9), certiorari denied280 U. S. 595.
2. The Commissioner determined deficiencies for the fiscal years ended November 30, 1942 and 1943, which petitioner contested in this Court, where it was held that by reason of petitioner's method of accounting deficiencies could not be determined on a fiscal year basis; orders of no deficiency were therefore entered for those fiscal years. 17 T. C. 733. Held, since the Court had no jurisdiction to approve any deficiencies for the calendar years in question, the mailing of the deficiency notices and the commencement of the prior proceedings did not suspend the running of the statute of limitations with respect to the calendar years 1942 and 1943.
3. Prior to the running of the period of limitations petitioner had taken the firm position, opposed by the Commissioner, that it had erroneously filed its returns on a fiscal year basis. In these circumstances, held, that petitioner is not precluded from relying upon the statute of limitations either by estoppel or some cognate principle such as was applied in R. H. Stearns Co. v. United States, 291 U. S. 54.
4. Held, the particular consents executed by the parties extending the period of limitations were not sufficient to render timely the notices of deficiency upon which the present proceedings are based. Floyd F. Toomey, Esq., Vincent H. Molony, Esq., John P. Lipscomb, Jr., Esq., Waymon G. Peavy, C. P. A., and Thomas J. Green, C. P. A., for the petitioner.
John J. O'Toole, Esq., and William G. O'Neill, Esq., for the respondent.
The Commissioner determined deficiencies in tax for the calendar years 1942 and 1943 as follows:
+-------------------------------------------------------+
¦ ¦1948 ¦1948 ¦
+---------------------------------+----------+----------¦
¦Income tax ¦$45,372.69¦$1,017.78 ¦
+---------------------------------+----------+----------¦
¦Excess profits tax ¦648,433.81¦334,422.28¦
+---------------------------------+----------+----------¦
¦Declared value excess-profits tax¦13,504.56 ¦64,667.95 ¦
+-------------------------------------------------------+
The initial question presented is whether the statute of limitations bars the assessment of the asserted deficiencies. The answer to this question makes unnecessary the resolution of other issues presented.
Some of the facts have been stipulated. The stipulation and the exhibits appended thereto are incorporated herein by this reference.
Petitioner was incorporated under the laws of Delaware on November 29, 1941. At all times material to the issues presented here, petitioner maintained its principal office in Shreveport, Louisiana. Its principal office is now located in Cleveland, Ohio.
On December 2, 1941, the incorporators of petitioner, at their first meeting, adopted by laws for the regulation of corporate affairs. Such bylaws provided for the conducting of financial affairs of the corporation on the basis of a fiscal year beginning on December 1 and ending on November 30 of the following calendar year. On the following day, at the first meeting of the board of directors of petitioner, the bylaws were approved and a resolution was adopted authorizing the employment of the firm of Barrow, Wade, Guthrie & Company to conduct audits of the financial affairs of the corporation and report thereon as promptly as practicable after the close of each fiscal year.
At all times material herein, petitioner maintained its books of account on the basis of the calendar year and used the accrual method of accounting. Petitioner filed the following Federal tax returns:
+-----------------------------------------------------------------------------+
¦Returns ¦Period covered ¦Date filed¦
+------------------------------------------+-----------------------+----------¦
¦Income and declared value excess-profits ¦Fiscal year ended Nov. ¦Apr. 27, ¦
¦tax (Form 1120). ¦30, 1942 ¦1943 ¦
+------------------------------------------+-----------------------+----------¦
¦Consolidated excess profits tax (Form ¦Fiscal year ended Nov. ¦Apr. 27, ¦
¦1121). ¦30, 1942 ¦1943 ¦
+------------------------------------------+-----------------------+----------¦
¦Income and declared value excess-profits ¦Fiscal year ended Nov. ¦Apr. 14, ¦
¦tax (Form 1120). ¦30, 1943 ¦1944 ¦
+------------------------------------------+-----------------------+----------¦
¦Excess profits tax (Form 1121). ¦Fiscal year ended Nov. ¦Apr. 14, ¦
¦ ¦30, 1943 ¦1944 ¦
+------------------------------------------+-----------------------+----------¦
¦Income and declared value excess-profits ¦Fiscal year ended Nov. ¦Apr. 16, ¦
¦tax (Form 1120). ¦30, 1944 ¦1945 ¦
+------------------------------------------+-----------------------+----------¦
¦Excess profits tax (Form 1121). ¦Fiscal year ended Nov. ¦Apr. 16, ¦
¦ ¦30, 1944 ¦1945 ¦
+-----------------------------------------------------------------------------+
All of such returns were filed with the collector of internal revenue at New Orleans, Louisiana. The subsidiary corporations joining with petitioner in the consolidated excess profits tax return for the fiscal year ended November 30, 1942, were the Atlas Oil Corporation and the Sparco Gasoline Company, Inc., both Louisiana corporations. Petitioner filed no income tax return, excess profits tax return, or consolidated excess profits tax return for the period ended November 30, 1941. Petitioner did not file any Federal tax returns whatsoever for the calendar years 1942 and 1943.
The petitioner and the Commissioner of Internal Revenue executed documents (Treasury Department Form 872 captioned ‘Consent Fixing Period of Limitations upon Assessment of Income and Profits Tax’) as follows:
No other forms 872 were executed by the parties with respect to the fiscal years ended November 30, 1942, November 30, 1943, and November 30, 1944. No such forms were executed which in terms dealt specifically with the year ended December 31, 1942, or December 31, 1943.
The following is a copy of the pertinent portion of the consent with respect to the year ended November 30, 1942, entered into by petitioner and respondent, and executed by respondent on January 4, 1946:
In pursuance of the provisions of existing Internal Revenue Laws Atlas Oil & Refining Corporation, a taxpayer (or taxpayers) of Shreveport, Louisiana, and the Commissioner of Internal Revenue hereby consent and agree as follows:
That the amount of any income, excess-profits, or war-profits taxes due under any return (or returns) made by or on behalf of the above-named taxpayer (or taxpayers) for the taxable year ended November 30, 1942, under existing acts, or under prior revenue acts, may be assessed at any time on or before June 30, 1947, except that, if a notice of a deficiency in tax is sent to said taxpayer (or taxpayers) by registered mail on or before said date, then the time for making any assessment as aforesaid shall be extended beyond the said date by the number of days during which the Commissioner is prohibited from making an assessment and for sixty days thereafter. All of the other consents referred to above contained the same language and differed only in dates and the years to which they were stated to be applicable.
In 1945, internal revenue agents were conducting an audit of petitioner's tax returns. It was then that petitioner took the position, which was opposed by the Commissioner, that its returns had been incorrectly filed on a fiscal year basis. This position was taken by petitioner in an endeavor to secure the benefits of section 112(b)(10), Internal Revenue Code, which was not applicable to taxable years beginning before January 1, 1, 1943. The calendar year-fiscal year issue was the subject of considerable discussion between petitioner's representatives and...
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