Crocker v. Commissioner of Internal Revenue
| Decision Date | 17 January 1934 |
| Docket Number | 49169,46743,48739,48656,46729-46731,47213,39152,Docket No. 33780,53938,36205,43464,55708. |
| Citation | 29 BTA 773 |
| Parties | HELEN V. CROCKER, PETITIONER, ET AL., v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Herman Phleger, Esq., and T. R. Meyer, Esq., for the petitioners.
Alva C. Baird, Esq., for the respondent.
These proceedings were consolidated for hearing. The respondent has determined the following deficiencies in income tax:
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| Docket | | Deficiency
Petitioner | No. | Year |
--------------------------------------|---------|------|------------
William H. Crocker __________________ | 47213 | 1924 | $31,724.97
Do ______________________________ | 47213 | 1925 | 5,633.11
William W. Crocker __________________ | 46743 | 1924 | 5,618.97
Do ______________________________ | 46743 | 1925 | 5,258.80
Do ______________________________ | 48656 | 1926 | 4,393.91
Charles Crocker _____________________ | 36205 | 1924 | 3,817.93
Do ______________________________ | 36205 | 1925 | 3,313.23
Do ______________________________ | 46731 | 1926 | 3,532.60
Do ______________________________ | 53938 | 1927 | 3,532.60
Ethel W. Crocker ____________________ | 39152 | 1924 | ___________
Do ______________________________ | 39152 | 1925 | $3,532.60
Do ______________________________ | 48739 | 1926 | 3,608.87
Ethel Mary de Limur _________________ | 43464 | 1925 | 3,230.13
Do ______________________________ | 46730 | 1926 | 3,508.44
Do ______________________________ | 49169 | 1927 | 3,532.62
Helen Crocker Russell _______________ | 46729 | 1926 | 3,577.64
Do ______________________________ | 55708 | 1927 | 5,633.72
Do ______________________________ | 55708 | 1928 | ___________
Helen V. Crocker ____________________ | 33780 | 1925 | 3,283.30
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The deficiencies for 1924 against the petitioners William H. Crocker and William W. Crocker are not contested. Since the respondent has determined no deficiencies against petitioner Ethel W. Crocker for 1924 and petitioner Helen Crocker Russell for 1928, we do not have jurisdiction to determine the deficiencies against these petitioners for these years.
These proceedings were submitted on the pleadings and on the following stipulation:
1. UNIVERSAL CONSOLIDATED OIL COMPANY was incorporated under the laws of the State of California on May 9, 1922, with an authorized capital stock of Ten Million Dollars ($10,000,000), divided into ten million (10,00,000) shares of the par value of One Dollar ($1) each.
2. UNIVERSAL OIL COMPANY was incorporated under the laws of the State of California on April 27, 1911, and on May 9, 1922, it had outstanding six hundred thousand (600,000) shares of capital stock of the par value of Ten Dollars ($10) per share. Its business consisted in owning and leasing oil properties and mining thereon for oil.
3. DEVILS DEN CONSOLIDATED OIL COMPANY was incorporated under the laws of the State of California on February 2, 1900, and on May 9, 1922, it had outstanding seventy-three thousand seven hundred sixty-two (73,762) shares of the par value of Ten Dollars ($10) per share. Its business consisted in owning and leasing oil properties and mining thereon for oil.
4. Under date of May 9, 1922, Universal Consolidated Oil Company —
(a) Acquired all of the business and assets and assumed all of the liabilities of Universal Oil Company by issuing to Universal Oil Company in payment therefor two million three hundred fifty-seven thousand eight hundred eighty-four (2,357,884) shares of the capital stock of Universal Consolidated Oil Company; and
(b) Acquired all of the business and assets and assumed all of the liabilities of Devils Den Consolidated Oil Company by issuing to Devils Den Consolidated Oil Company eight hundred eleven thousand three hundred eighty-two (811,382) shares of the capital stock of Universal Consolidated Oil Company.
5. The opening entries on the books of Universal Consolidated Oil Company showed:
Capital stock ______________________________ $3,169,266
this being the aggregate par value of shares issued to Universal Oil Company and Devils Den Consolidated Oil Company in payment for their assets (subject to their liabilities). On December 31, 1923, a surplus of One Hundred Seventy-three Thousand Eight Hundred Seventy-three and 11/100th Dollars ($173,873.11) was recorded on the books as of May 9, 1922, as the result of a revaluation of certain properties. Said surplus constituted the only surplus recorded on the books of the new company as of the last named date. The only shares in addition to the above which were issued by Universal Consolidated Oil Company, at or prior to the acquisition of the properties and assets of the Universal Oil Company and Devils Den Consolidated Oil Company, were nine hundred (900) shares, being one hundred (100) shares issued to each of the nine (9) incorporators of the company at par for cash.
6. SAUER DOUGH OIL COMPANY was incorporated under the laws of the State of California. On September 29, 1922, it had in its treasury five hundred fifty-eight thousand one hundred seventy-three (558,173) shares of the capital stock of Universal Consolidated Oil Company, which constituted substantially all its assets. On that date Universal Consolidated Oil Company offered to exchange 1.42 of its shares for each share of Sauer Dough Oil Company outstanding. As a result of this offer Universal Consolidated Oil Company issued five hundred sixty-one thousand three hundred ninety-seven (561,397) shares of its stock to stockholders of Sauer Dough Oil Company in exchange for their stock in Sauer Dough Oil Company, and later took over the assets of Sauer Dough Oil Company which consisted of stock of Universal Consolidated Oil Company.
7. The predecessor companies had an undistributed surplus as of May 9, 1922, and earned since March 1, 1913, of an amount in excess of all dividends paid by the Universal Consolidated Oil Company from the time of its organization (May 9, 1922) to and including December 31, 1927.
8. Charles Crocker received dividends from Universal Consolidated Oil Company during the year 1924 amounting to Seventeen Thousand Six Hundred Sixty-three and 4/100th Dollars ($17,663.04) and no more, and said Charles Crocker returned all of said dividends in his income tax return for the year 1924, and paid income tax thereon.
9. The following named petitioners received dividends or distributions from Universal Consolidated Oil Company during the following years, in the following amounts, and no more, and returned and paid income tax on the following amounts out of said dividends, and no more:
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Docket No. | Name | Year | Dividends | Dividends | Dividends
| | | received | returned | not returned
----------------------|-----------------------------------|------|------------|-----------|-------------
36205 _______________ | Charles Crocker _________________ | 1925 | $17,663.04 | $662.36 | $17,000.68
33780 _______________ | Helen V. Crocker ________________ | 1925 | 17,663.04 | 662.36 | 17,000.68
43464 _______________ | Ethel Mary de Limur _____________ | 1925 | 17,663.04 | 662.36 | 17,000.68
39152 _______________ | Ethel W. Crocker ________________ | 1925 | 17,663.04 | 662.38 | 17,000.66
47213 _______________ | William H. Crocker ______________ | 1925 | 22,037.68 | 826.42 | 21,211.26
46743 _______________ | William W. Crocker ______________ | 1925 | 18,103.04 | 678.86 | 17,424.18
53938 _______________ | Charles Crocker _________________ | 1927 | 17,663.04 | None | 17,663.04
55708 _______________ | Helen Crocker Russell ___________ | 1927 | 17,663.04 | None | 17,663.04
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10. For the purpose of determining the taxability of dividends or distributions made by Universal Consolidated Oil Company during the years 1925, 1926 and 1927, it is stipulated that said corporation, since its incorporation on May 9, 1922, has had earnings or profits available for dividends, or losses, and has paid dividends or made distributions as follows:
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| Earnings | Losses | Dividends or
| | | distributions
--------------------------------|-------------|----------------------------------------------|---------------
May 9,-Dec. 31, 1922 __________ | $107,879.76 | ____________________________________________ | ______________
1923 __________________________ | 207,271.81 | ____________________________________________ | ______________
1924 __________________________ | 48,106.28 | ____________________________________________ | $255,725.60
1925 __________________________ | 66,301.95 | ____________________________________________ | 267,725.60
1926 __________________________ | 176,353.33 | ____________________________________________ | 271,725.60
1927 __________________________ | ___________ | Loss sustained in undetermined amount ______ | 286,483.04
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provided, however, that the earnings...
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