Dillman Bros. Asphalt Co. v. Comm'r of Internal Revenue, Docket No. 4238-73.
Citation | 64 T.C. 793 |
Decision Date | 05 August 1975 |
Docket Number | Docket No. 4238-73. |
Parties | DILLMAN BROTHERS ASPHALT CO., INC., PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
Court | United States Tax Court |
OPINION TEXT STARTS HERE
V. Downing Edwards, for the petitioner.
F. Patrick Matthews, for the respondent.
Rule 60(c), Tax Court Rules of Practice and Procedure.— Held: Wis. Stat. Ann. sec. 180.787 providing for survival of remedies for and against a dissolved corporation limits capacity of a dissolved corporation to sue. Dissolved corporation had no authority to file petition in Tax Court more than 2 years after dissolution. Respondent's motion to dismiss for lack of jurisdiction granted.
By notice of deficiency mailed to petitioner on March 14, 1973, respondent determined deficiencies in petitioner's income taxes for the years 1966 and 1969 in the amounts of $1,342.64 and $69,557.91 respectively. The petitioner herein was filed June 8, 1973, in which it was alleged, inter alia, that inasmuch as petitioner was dissolved February 17, 1970, respondent was without jurisdiction to determine a tax deficiency against petitioner on March 14, 1973. Respondent's answer having been filed, the parties were notified on February 26, 1975, that the case was set for trial in Milwaukee, Wis., on June 2, 1975.
On March 13, 1975, petitioner filed a Motion For Summary Judgment on the ground that the ‘Commissioner was without jurisdiction to assess a deficiency against the Petitioner and was barred from assessing such a deficiency when the Commissioner issued his 90-day Notice of Deficiency by Wisconsin Statutes sec. 180.787.’ The parties on April 25, 1975, filed a joint motion to continue the trial of the case and to submit the motion for summary judgment on a stipulation of facts. On May 19, 1975, respondent filed a Motion To Dismiss For Lack of Jurisdiction on the grounds that pursuant to Rule 60(c) of the Rules of Practice and Procedure, United States Tax Court, and Wisconsin Statutes Annotated section 180.787, the petitioner lacked the capacity to commence this litigation when the petition was filed.
On June 2, 1975, the Court took both motions under advisement on the stipulation of facts filed by the parties and both parties have filed briefs. 1
The stipulated facts in pertinent part are as follows:
Dillman Bros. Asphalt Co., Inc. (hereinafter petitioner), was a Wisconsin corporation having its principal office at Lancaster, Wis. It filed its corporate income tax return for 1966 with the District Director of Internal Revenue at Milwaukee, Wis., on March 16, 1967, and its corporate income tax return for 1969 with the Director of the Internal Revenue Service Center at Kansas City, Mo., on March 19, 1970.
On February 11, 1970, petitioner filed articles of dissolution with the secretary of state of Wisconsin and a certificate of dissolution was issued the same day, both of which were forthwith filed with the register of deeds of Crawford County, Wis., on February 17, 1970.
Petitioner was dissolved and ceased its corporate existence on February 17, 1970. All of its assets, greater in value than the proposed income tax deficiencies asserted against it, were distributed on a pro rata basis on or before February 11, 1970, to Bruce Dillman and Blair Dillman, each of whom held 50 percent of the outstanding stock of petitioner. As a result of the distribution Bruce and Blair Dillman each received over $70,900.55.
By a statutory notice of deficiency sent petitioner on March 14, 1973, respondent determined deficiencies in petitioner's corporate income tax for the years 1966 and 1969, in the amounts of $1,342.64 and $69,557.91, respectively. 2 The mailing of the notice of deficiency was more than 3 years after the dissolution of petitioner was completed, but with 3 years of the filing of petitioner's tax return for 1969.
On February 16, 1973, petitioner and respondent executed a Special Consent Fixing Period of Limitation Upon Assessment of Income Tax for 1969. No other such special consents were executed.
The issue on the merits is whether petitioner incurred any section 1245 gain on the sale of its equipment in 1969.
In its brief in opposition to respondent's motion to dismiss for lack of jurisdiction, petitioner argues that because that motion was filed subsequent to petitioner's motion for summary judgment, petitioner's motion should be decided before the motion to dismiss is heard because if the motion for summary judgment is granted, there will be no need to consider respondent's motion to dismiss. We disagree. The Tax Court, being a court of limited jurisdiction, must first determine whether jurisdiction exists. Wheeler's Peachtree Pharmacy, Inc., 35 T.C. 177 (1960); National Committee to Secure Justice, Etc., 27 T.C. 837 (1957); First Nat. Bank of Wichita Falls, Trustee, 3 T.C. 203 (1944); Southern California Loan Association, 4 B.T.A. 223 (1926). Therefore, it is appropriate to consider respondent's motion to dismiss prior to consideration of petitioner's motion for summary judgment.
The petition in this case was filed more than 2 years after petitioner was dissolved. Rule 60(c), Tax Court Rules of Practice and Procedure, provides: ‘Capacity: * * * The capacity of a corporation to engage in such litigation (in this Court) shall be determined by the law under which it was organized.’ Rule 60(c) merely codified the existing practice of this Court. See Great Falls Bonding Agency, Inc., 63 T.C. 304 (1974); Wheeler's Peachtree Pharmacy, Inc., supra; Columbia River Orchards, Inc., 15 T.C. 253 (1950). See also Title Co. v. Wilcox Bldg. Corp., 302 U.S. 120 (1937), wherein it was stated that the length of time that a corporation continues to exist as a body corporate depends on the law of the State where the corporation was created.
Petitioner was created and dissolved under Wisconsin law. Section 180.787 of the Wisconsin Statutes3 provides that dissolution of a corporation shall not take away or impair any remedy to or against the corporation, its directors, officers, or shareholders, for any right or claim existing or any liability incurred prior to such dissolution if action or other proceeding thereon is commenced within 2 years after the date of dissolution. It is clear that under Wisconsin law petitioner had 2 years from the date of dissolution within which to commence this proceeding. See Bazan v. Kux Machine Co., 52 Wis.2d 325, 190 N.W.2d 521 (1971), interpreting a similar Illinois statute.
The identical issue presented in this case was very recently considered by this Court in Great Falls Bonding Agency, Inc., supra. We granted respondent's motion to dismiss for lack of jurisdiction because the corporate petitioner which had been created under Illinois law had been dissolved more than 2 years before the petition was filed and lacked the capacity to institute any legal...
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