Greenwald v. United States, 45511.
| Decision Date | 06 November 1944 |
| Docket Number | No. 45511.,45511. |
| Citation | 57 F. Supp. 569 |
| Parties | GREENWALD v. UNITED STATES. |
| Court | U.S. Claims Court |
COPYRIGHT MATERIAL OMITTED
Temple W. Seay, of Washington, D. C. (Phil D. Morelock, of Washington, D. C., and Weil, Gotshal & Manges, of New York City, on the briefs), for plaintiff.
H. S. Fessenden, of Washington, D. C., and Samuel O. Clark, Jr., Asst. Atty. Gen. (Robert N. Anderson and Fred K. Dyar, both of Washington, D. C., on the brief), for defendant.
Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
The plaintiff was employed by a corporation under a contract which provided that, in addition to a fixed salary, he should receive a percentage of the amount by which the profits of the corporation exceeded a stated sum. The corporation had, from the time of its organization in 1929, employed the same firm of certified public accountants to audit its accounts and inform it of its financial position. The supervising accountant who directed the audits of the corporation's books during the years 1934, 1935, and 1936 caused false audits to be made which showed that the corporation had made profits greatly in excess of its actual profits for those years. The corporation paid the plaintiff bonuses computed upon the basis of these exaggerated profits, and the plaintiff paid the Government income taxes for those years upon the bonuses so received, as well as upon his other income.
In 1938 the corporation discovered the falsifications of the auditor, and the plaintiff in that year and in 1939 repaid to the corporation the amount of the overpayments to him. In 1942 the plaintiff filed, apparently timely, protective claims for refund of taxes paid by him in 1938 and 1939, on the ground that these payments were deductible business losses. These protective claims were intended to preserve his rights in case he should not succeed in recovering the taxes paid in 1934, 1935, and 1936, on the exaggerated bonuses, as to which he had filed claims for refund in 1938. Refunds were not made in response to his claims filed in 1938 for the years 1934, 1935, and 1936, hence this suit.
The corporation deducted the bonuses paid the plaintiff for the years in question as business expenses when it made its returns for taxes for those years. When the falsifications were discovered, the Commissioner of Internal Revenue adjusted the taxable income of the corporation for those years by disallowing the deductions.
The Government contends that, as to the alleged overpayment for 1934, this suit was not commenced within two years after the plaintiff's claim was rejected and hence is barred by Section 3226 of the Revised Statutes, 26 U.S.C.A. Int.Rev.Code, § 3772. The plaintiff at the argument conceded the validity of this defense, hence we do not further consider the 1934 situation.
We go now to the merits of the claims for 1935 and 1936, as to which claims for refund were filed in time and this suit was commenced in time. The Government relies principally on the doctrine stated in North American Oil Consolidated v. Burnet, 286 U.S. 417, 424, 52 S.Ct. 613, 615, 76 L.Ed. 1197, as follows: "If a taxpayer receives earnings under a claim of right and without restriction as to its disposition, he has received income which he is required to return, even though it may still be claimed that he is not entitled to retain the money, and even though he may still be adjudged liable to restore its equivalent." This doctrine has been applied in many cases. The plaintiff urges that it is not applicable here, because his receipt of...
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Haberkorn v. United States
...rule. We recognize that there is authority to the contrary, particularly the two cases from the Court of Claims of Greenwald v. United States, 57 F.Supp. 569, 102 Ct.Cl. 272, and Gargaro v. United States, 109 Ct. Cl. 528, 73 F.Supp. 973. In the Gargaro case the taxpayer's liability to make ......
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United States v. Lewis
...tax return. See G.C.M. 16730, XV—1 Cum. Bull. 179 (1936). The Court of Claims, however, relying on its own case, Greenwald v. United States, 57 F.Supp. 569, 102 Ct.Cl. 272, held that the excess bonus received 'under a mistake of fact' was not income in 1944 and ordered a refund based on a r......
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Lewis v. United States
...he was entitled to keep it, and pays it back, he is entitled to a refund from the Government of the tax paid on it. Greenwald v. United States, 57 F.Supp. 569, 102 Ct.Cl. 272; Gargaro v. United States, 73 F.Supp. 973, 109 Ct.Cl. 528. Our reasons for so holding were stated at length in our o......
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Gargaro v. United States, 47677.
...which tends to bear out its contention. The plaintiff's situation seems to us to be like that of the plaintiff in Greenwald v. United States, 57 F.Supp. 569, 102 Ct.Cl. 272. In that case, as in this, the plaintiff was employed at a salary plus a percentage of net profits. The corporation's ......