Goldring v. Comm'r of Internal Revenue

• Decision Date: 16 April 1953
• Docket Number: Docket Nos. 35098.
• Citation: 20 T.C. 79
• Parties: IRA GOLDRING, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.JESSICA GOLDRING, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

20 T.C. 79

IRA GOLDRING, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.JESSICA GOLDRING, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket Nos. 35098.

Tax Court of the United States.

Promulgated April 16, 1953.

Petitioners filed original returns for the calendar year 1945 which omitted more than 25 per cent of their gross income. Fifteen months later they filed amended returns which purported to correct, in part, the original omission so as to reduce it below 25 per cent. Held, respondent did not err in asserting the deficiency under section 275(c). Richard L. Rykoff, Esq., for the petitioners.

Edward H. Boyle, Esq., for the respondent.

These proceedings involved deficiencies in income tax as follows:

+----------------------------------+
                ¦Year¦Ira Goldring¦Jessica Goldring¦
                +----+------------+----------------¦
                ¦1945¦$3,753.18   ¦$3,753.18       ¦
                +----+------------+----------------¦
                ¦1946¦22,950.14   ¦9,368.64        ¦
                +----+------------+----------------¦
                ¦1947¦3,551.38    ¦                ¦
                +----+------------+----------------¦
                ¦    ¦            ¦                ¦
                +----------------------------------+
                

The cases were consolidated for hearing and opinion. The sole issue is whether the assessment and collection of the deficiencies for the year 1945 are barred by the statute of limitations, section 275, Internal Revenue Code. All other matters raised in the notices of deficiency were settled by stipulation of the parties. All facts were stipulated and are so found.

FINDINGS OF FACT.

The petitioner Ira Goldring is an individual residing in Las Vegas, Nevada. Petitioner Jessica Goldring is an individual residing in Los Angeles, California. Ira Goldring filed individual income tax returns for the calendar years 1945, 1946, and 1947, and Jessica Goldring filed individual income tax returns for the calendar years 1945 and 1946. All of these returns were filed with the collector of internal revenue for the district of Nevada.

It is stipulated that there is a deficiency in income tax for Ira Goldring for the calendar year 1946 in the amount of $14,363.78, and for the calendar year 1947 in the amount of $3,551.38, and that there is a deficiency in income tax for Jessica Goldring for the calendar year 1946 in the amount of $8,038.29.

On March 15, 1946, the petitioners, Ira and Jessica Goldring, filed separate original individual income tax returns for the calendar year 1945, each showing a tax of $2,808.33, which has been paid. On June 16, 1947, both petitioners filed amended returns for the calendar year 1945, showing a tax of $3,788.31 each, which has been paid. No consents extending the statute of limitations have been executed by either petitioner for the calendar year 1945.

On March 14, 1951,¹ a statutory notice of deficiency was issued to Jessica Goldring, and on March 15, 1951, a similar notice was issued to Ira Goldring. In each it was stated:

The five-year period of limitation for assessment provided in section 275(c) of the Internal Revenue Code is held to be applicable to the taxable year ended December 31, 1945, since there has been an omission from gross income of an amount which is in excess of 25 per cent of the gross income stated in the return.

In his original individual income tax return for the calendar year 1945, Ira Goldring omitted from gross income an amount properly includible therein which was in excess of 25 per centum of the amount of gross income stated in the return. He did not omit from the gross income stated in the amended return for the calendar year 1945 an amount in excess of 25 per centum of the gross income stated in that amended return.

In her original individual income tax return for the calendar year 1945, Jessica Goldring omitted from gross income an amount properly includible therein which was in excess of 25 per centum of the amount of gross income stated in that return. She did not omit from the gross income stated in the amended return for the calendar year 1945 an amount in excess of 25 per centum of the gross income stated in that amended return.

OPINION.

BRUCE, Judge:

The sole question is whether the assessment and collection of the deficiencies asserted by respondent for the year 1945 are barred by the statute of limitations, section 275, Internal Revenue Code. There is no contest between the parties on the correctness of the deficiencies. Section 275 provides in part as follows:

SEC. 275. PERIOD OF LIMITATION UPON ASSESSMENT AND COLLECTION.

Except as provided in section 276—

(a) GENERAL RULE.— The amount of income taxes imposed by this chapter shall be assessed within three years after the return was filed, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period.

(c) OMISSION FROM GROSS INCOME.— If the taxpayer omits from gross income an amount properly includible therein which is in excess of 25 per centum of the amount of gross income stated in the return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 5 years after the return was filed.

The parties agree that with respect to petitioners' original returns there was an omission from gross income within the terms of section 275(c). Petitioners contend, however, that the amended returns filed some 15 months after the statutory date of filing² relate back to the original returns both as to time and as to their effect in correcting any original inadequacies in the original returns. Thus they argue that by eliminating an understatement in gross income of 25 per cent or more by means of such amended returns, subsection (c) is no longer applicable and the bar of subsection (a) applies. We are unable to agree with this contention.

There is no statutory provision for an amended return, and the acceptance or rejection thereof is solely within the discretion of the Commissioner. Kunkel & Co., 3 B.T.A. 133; Keeler v. Commissioner, 180 F.2d 707, affirming 12 T.C. 713. The word ‘return‘ has been construed in numerous cases to include only the original return. National Refining Co. of Ohio, 1 B.T.A. 236; E. L. Harris, 5 B.T.A. 1026; Union Pacific R. Co. v. Bowers, 24 F.2d 788; Zellerbach v. Helvering, 293 U.S. 172; Shire v. McGowan, (W.D.N.Y. May 25, 1939) 24 AFTR 1256; Riley Investment Co. v. Commissioner, 311 U.S. 55; Alexander C. Howe, 44 B.T.A. 894.

In National Refining Co. of Ohio, supra, the Board of Tax Appeals, in construing the phrase ‘five years after the return was filed‘ in a prior revenue act, stated:

Sections 250(d) of the act of 1921 and 277(a)(2) of the act of 1924 provide that the limitation shall operate ‘five years after the return was filed.‘ The phrase the return has a definite article and a singular subject; therefore, it can only mean one return, and that the return contemplated by the act under which it was filed. The Revenue Acts of 1916 and 1917 provided for the time and place of filing returns in identical language (Sec. 13(b)(1)) and specified:

The return shall be made to the collector of the district in which is located the principal office of the corporation, company, or association, where are kept its books of account and other data from which the return is prepared. * * *

Again we find a definite article and a definite subject described, viz, the return. The language of the sections referred to does not describe any return or many returns, but one special return which is to be filed in one special place at or within a specified time.

It has been held that the statute of limitations starts to run in connection with the filing of the original return and its running cannot in any way be affected or suspended by the later filing of amended returns. Belle R. Weaver, 4 B.T.A. 15; Estelle B. Sargent, 22 B.T.A. 1270; Anna M. B. Foster, 45 B.T.A. 126, affd. 131 F.2d 405; E. S. Heller, 10 B.T.A. 53. Accord: Isaac Goldman Co. v. Burnet, 51 F.2d 427; Florsheim Bros. V. United States, 280 U.S. 453; Mertens, Law of Federal Income Taxation, Vol. 10, c. 57, secs. 57.15, 57.37.

In Union Pacific R. Co. v. Bowers, supra, the court stated that the voluntary filing of an amended return and payment of the tax shown thereon ‘had nothing to do with the basis of the assessment and was only a credit pro tanto by payment on account of the deficiency which stopped interest running.‘

Petitioners herein filed their amended returns more than a year after the due date. There is no suggestion that any extension was granted, and in any event the amended returns were filed long after the time amended returns might have been permitted. Cf. Commissioner v. Titus Oil & Investment Co., 132 F.2d 969, reversing 42 B.T.A. 1134; L. & C. Mayers Co., 45 B.T.A. 528; Second Carey Trust, 2 T.C. 629; Venetian Shortway, Inc., 4 T.C. 244; Scaife Co. v. Commissioner, 314 U.S....