Field v. Comm'r of Internal Revenue
| Decision Date | 24 April 1959 |
| Docket Number | Docket Nos. 59565-59570,61244. |
| Citation | 32 T.C. 187 |
| Parties | ANN C. FIELD, TRANSFEREE, ET AL.,1 PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
F. W. Donovan, Esq., for the petitioners.
Robert B. Pierce, Esq., for the respondent.
A Michigan corporation was dissolved on April 27, 1951. Under Michigan law its corporate existence continued for 3 years, or longer, for the purpose of settling its affairs and concluding a proceeding commenced by it prior to dissolution or within the 3-year winding-up period. Immediately after dissolution, all of the corporation's assets were distributed to its stockholders. At the time of dissolution, the corporation's liability for Federal taxes was in dispute and unsettled. The corporation, through its officers and liquidating directors, respectively, executed successive waivers in advance of expiration of statute of limitations extending the period for assessment of tax deficiencies. Waivers were executed before and after the filing of certificate of dissolution. The last waivers, which extended the period of limitation to June 30, 1954, were executed before the end of the 3-year winding-up period. Held: (1) A ‘proceeding’ within the intent of Michigan law was commenced by the corporation within the 3-year winding-up period upon its filing with the respondent of an offer in compromise. (2) The corporation's winding-up period was extended beyond 3 years. (3) The last waivers of the corporation extending the period of limitation to June 30, 1954, were valid. (4) The statutory notices of transferee liability issued to petitioners were timely.
The Commissioner determined, and there is due and owing, the following deficiencies in taxes of Adwood Corporation, plus statutory interest:
The Commissioner determined that each petitioner2 is liable for the deficiencies of Adwood Corporation as set forth above, plus statutory interest, as a transferee of assets of the corporation.
The question presented is whether the statute of limitations bars the assessment and collection of any liability due from each petitioner as a transferee for unpaid deficiencies of Adwood Corporation for the years 1946-1950, inclusive.
Adwood Corporation (hereinafter called Adwood) was organized under the laws of Michigan. It kept its books and filed its returns on the basis of a fiscal year ended May 31. It filed its income and excess profits tax returns for the fiscal years ended in 1945-1950, inclusive, with the collector of internal revenue for the district of Michigan in Detroit.
The petitioner Ethel Daniels is the widow of Max Daniels, who died on August 16, 1952, a former stockholder of Adwood. Max Daniels was a transferee of assets of Adwood. Ethel Daniels is a transferee of assets of the estate of Max Daniels. All of the other petitioners are transferees of Adwood.
On March 27, 1951, the stockholders of Adwood duly adopted a resolution to dissolve the corporation and distribute all of the corporation's assets to the stockholders, except for those stockholders who exercised an option to receive cash.
On March 27, 1951, a certificate of dissolution of Adwood was executed by the holders of more than three-fourths of the stock of Adwood; the certificate was filed on April 27, 1951, pursuant to the provisions of section 73 of the Michigan Corporation Law, as amended, with the Michigan Corporation and Securities Commission.
On March 27, 1951, Adwood filed a notice of adoption of a resolution of dissolution and liquidation (Form 966) with the Commissioner pursuant to the provisions of section 148(d) of the 1939 Code.
The directors of Adwood at the time the certificate of dissolution was filed were Hal D. Cantin, Irving Bilton, Max Daniels, Samuel J. Baskin, and Harry Gold. Adwood's officers at that time were: President, Irving Bilton; vice president, Harry Gold; secretary-treasurer, Hal D. Cantin; assistant secretary and assistant treasurer, Max Daniels; assistant secretary and assistant treasurer, Florence A. Moran.
At the time the certificate of dissolution was filed, 104,281 shares of common stock of Adwood were outstanding, of which 101,475 shares were held by Bilton, Baskin, Cantin, Daniels, Gold,3 and Ann C. Field, and 2,806 shares were held by others. On April 27, 1951, the common stock of Adwood was held by 13 stockholders, as follows:
+-------------------------------------------------------+
¦Name ¦Amount of shares ¦
+------------------------------------+------------------¦
¦Irving Bilton ¦14,782 ¦
+------------------------------------+------------------¦
¦Samuel J. Baskin ¦13,107 ¦
+------------------------------------+------------------¦
¦Hal D. Cantin ¦35,433 ¦
+------------------------------------+------------------¦
¦Max Daniels ¦5,000 ¦
+------------------------------------+------------------¦
¦Ann C. Field ¦8,988 ¦
+------------------------------------+------------------¦
¦Harry Gold ¦24,165 ¦
+------------------------------------+------------------¦
¦William P. Andre ¦247 ¦
+------------------------------------+------------------¦
¦Harry Gold ¦398 ¦
+------------------------------------+------------------¦
¦Anthony J. Andre, Jr ¦247 ¦
+------------------------------------+------------------¦
¦The Union & League of ¦930 ¦
+------------------------------------+------------------¦
¦Roumanian Societies of America, Inc.¦930 ¦
+------------------------------------+------------------¦
¦Hilda Lanoff ¦489 ¦
+------------------------------------+------------------¦
¦Eugene R. Andre ¦247 ¦
+------------------------------------+------------------¦
¦H. Margaret Cooley ¦248 ¦
+------------------------------------+------------------¦
¦Total ¦104,281 ¦
+-------------------------------------------------------+
Prior to its dissolution, the business of Adwood was the leasing of a hotel known as Hotel Detroiter, located at 2560 Woodward Avenue, Detroit, Wayne County, Michigan. At the time of dissolution, the principal property owned by Adwood was the parcel of land where the hotel was located, the building on the land, and the fixtures, equipment, and furniture in the hotel. The property was subject to various encumbrances.
Pursuant to a plan of liquidation, Adwood made transfers to the following 6 stockholders (now petitioners in these proceedings) on April 28, 1951, by quitclaim deed, of undivided fractional interests in the property known as the Hotel Detroiter, including the personal property located therein, in proportion to their ownership of stock of the corporation. Adwood also made distributions to its other 7 stockholders, which are described hereinafter, representing 2,806/104,281 interest in Adwood's assets. The quitclaim deed was signed for Adwood by Bilton, president, and Moran, assistant secretary. The 6 stockholders received distribution of 101,475/104,281 fractional, undivided interests in the hotel property, as follows:
The distribution of the undivided interests in the hotel property of Adwood, listed above, constituted a distribution to the above-named stockholders of property having the values set forth below, on the basis of which the transferee liability of each of the petitioners has been established. The undivided interests received by the stockholders involved here had the following values on April 28, 1951:
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