California Iron Yards Co. v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 24 January 1929 |
| Docket Number | Docket No. 11841,17309. |
| Citation | 15 BTA 25 |
| Parties | CALIFORNIA IRON YARDS CO., E. D. KEEFFE, TRUSTEE, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Robert A. Littleton, Esq., W. W. Spalding, Esq., and M. Serf, C. P. A., for the petitioner.
John D. Foley, Esq., for the respondent.
In this proceeding petitioner seeks a redetermination of the income and profits taxes for the fiscal years ending January 31, 1918, January 31, 1919, and January 31, 1920, for which the Commissioner has determined deficiencies of $544.66, $22,060.35, and $11,440.60 respectively.
The petitioner alleges error on the part of the Commissioner —
(1) In endeavoring to assess and collect taxes for the three years involved after the right to assess and collect such taxes has been barred by the statute of limitations.
(2) In restoring to book income for the fiscal year ending January 31, 1919, an item of $798.17 alleged to be 1917 income tax, an item of $714.70 alleged to be a reserve for taxes, and an item of $587.48 alleged to be excessive depreciation.
(3) In restoring to net income for the fiscal year ending January 31, 1919, an item of $22,544 alleged to be 1918 income taxes, an item of $13,143 alleged to be a franchise tax, and an item of $8,320.12 alleged to be excessive depreciation.
(4) In restoring to net income for the fiscal year ending January 31, 1920, an item of $6,220.56 alleged to be 1919 income taxes, an item of $13,000 alleged to be excessive salaries paid, and an item of $1,748.54 alleged to be excessive depreciation.
(5) In failing to allow for the fiscal periods ending January 31, 1918, January 31, 1919, and January 31, 1920, any deduction for the amortization of the plant and machinery acquired subsequent to April 6, 1917, and used for the production of articles contributing to the prosecution of the war.
(6) In failing to allow adequate depreciation on the plant and equipment for the fiscal years in question.
(7) In failing to allow as a deduction for the fiscal year ending January 31, 1920, a loss sustained by reason of the obsolescence of an acetylene generator which cost the petitioner $500.
(8) In refusing to compute excess-profits taxes for the fiscal years ending January 31, 1919, and January 31, 1920, under the provisions of sections 327 and 328 of the Revenue Act of 1918.
FINDINGS OF FACT.
The California Iron Yards Company was a corporation organized on or about February 3, 1914, under the laws of the State of California. It took over the business of buying, selling and dealing in scrap iron theretofore conducted and carried on individually by Wm. H. McDaniel and E. D. Keeffe. Wm. H. McDaniel, E. D. Keeffe and D. J. A. O'Keeffe became the officers and directors of the petitioner and were acting in that capacity on December 8, 1920, when the business, property and assets of the petitioner were sold, transferred and delivered to the California Iron Yards Corporation, a corporation organized and existing under the laws of the State of California. On March 5, 1921, the corporate rights, privileges and powers of the California Iron Yards Co. were suspended on account of failure to pay its license tax under the statutes of the State of California.
The following instruments with respect to the fiscal years ending January 31, 1918, January 31, 1919, and January 31, 1920, were introduced in evidence:
SAN FRANCISCO, CAL., Feb. 15, 1923.
In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, California Iron Yards Co., Inc., of San Francisco, 1923 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 California Yards Co., Inc. for the years Ending Jan. 31, 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, irrespective of any period of limitations.
CALIFORNIA IRON YARDS CO. (Signed) WM. H. McDANIEL, Pres.
Taxpayer By ANDREW M. STEED Secty. D. H. BLAIR Commissioner. APRIL 9, 1924
In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Calif. Iron Yards Corpn., of San Francisco, Cal., 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 Calif. Iron Yards Corpn. for the years 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.
CALIFORNIA IRON YARDS CORPN. Taxpayer By E. D. KEEFFE, Pres. By ANDREW STEED, Secty. D. H. BLAIR, Commissioner. APRIL 9, 1924
In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Calif. Iron Yards Corpn., of San Francisco, Cal. 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 Calif-Iron Yards Corpn. for the year Nineteen hundred and Nineteen, 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.
CALIFORNIA IRON YARDS CORPN. Taxpayer By E. D. KEEFFE, Pres. By ANDREW STEED, Secty. D. H. BLAIR, Commissioner. JAN. 16, 1925
(For taxable years ended prior to March 1, 1921)
In pursuance of the provisions of existing Internal Revenue Laws California Iron Yards Co., a taxpayer of 34 Missouri Avenue, San Francisco, Calif., 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(s) 1918 and 1919 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.
CORPORATE SEAL Seal of the California Iron Yards Corporation. E. D. KEEFFE, Taxpayer Pres. By ANDREW STEED, Secty. D. H. BLAIR, Commissioner. MARCH 27, 1925.
(For taxable years ended prior to March 1, 1921)
In pursuance of the provisions of existing Internal Revenue Laws California Iron Yards Corp., a taxpayer of 554 Bryant St., San Francisco, Calif., 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(s) Fiscal Year Ending January 31, 1920 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.
CALIFORNIA IRON YARDS CORP. Taxpayer By HARRY E. Vice president D. H. BLAIR, Commissioner
Wm. H. McDaniel, president of the petitioner, died on June 3, 1923. The president of the corporation having died and the charter of the corporation having been suspended the petition, Docket No. 11841, before this Board was presented by E. D. Keeffe and D. J. A. O'Keeffe, the sole surviving directors of the petitioner, and petition, Docket No. 17309, was filed by E. D. Keeffe before this Board on June 16, 1926, at which time he was the sole surviving director of the petitioner.
The business of the California Iron Yards Co., the petitioner, was that of gathering scrap iron from places in and about the City of San Francisco and shipping the same to its plant or yards, at...
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