Hind v. Commissioner of Internal Revenue, Docket No. 19167.

• Decision Date: 09 November 1929
• Docket Number: Docket No. 19167.
• Parties: GEORGE U. HIND, INDIVIDUALLY AND AS A FORMER MEMBER OF, AND ON BEHALF OF THE PARTNERSHIP OF HIND ROLPH & CO., NOW DISSOLVED, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

18 B.T.A. 96 (1929)

GEORGE U. HIND, INDIVIDUALLY AND AS A FORMER MEMBER OF, AND ON BEHALF OF THE PARTNERSHIP OF HIND ROLPH & CO., NOW DISSOLVED, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 19167.

Board of Tax Appeals.

Promulgated November 9, 1929.

George E. H. Goodner, Esq., for the petitioner.

John D. Foley, Esq., and Lloyd W. Creason, Esq., for the respondent.

The taxes in controversy are excess-profits taxes for the calendar year 1917, in the amount of $199,611.29. The taxes were assessed against, and notice of said assessment sent to, Hind Rolph & Co. Petitioner alleges that the Commissioner has erred in failing to compute the tax liability of Hind Rolph & Co. for the year 1917 under the provisions of section 209 of the Revenue Act of 1917, and pleads the statute of limitations as a bar to the collection of the entire proposed deficiency.

FINDINGS OF FACT.

Hind Rolph & Co. was a partnership organized in 1898 and dissolved in September, 1921. During its entire existence it was composed of two partners — George U. Hind and James Rolph, Jr., each owning a one-half interest. Its principal office was in San Francisco, Calif., and its business was that of broker, agent, and commission merchant. Upon its organization each partner contributed $2,500 capital.

The partnership ran its business largely on letters of credit, borrowed money and deposits and balances left with it by concerns with which it did business. It owned some real estate and vessels and had debts due it which drew interest. It carried no inventories and sold its goods and merchandise before they were purchased. Upon making a sale it would draw on the one to whom the goods were sold, discounting the draft at the bank, and with the proceeds thereof purchase the goods specified.

The partnership filed an income-tax return for 1917 on Form 1065 on April 1, 1918. On July 20, 1918, respondent assessed a tax thereon of $23,794.48. The tax assessed was subsequently paid by the partnership. In September, 1921, said partnership was dissolved. Upon reaudit of the partnership return, respondent, in December, 1921, assessed an additional tax of $199,611.29. The collector of internal revenue at San Francisco, on or about January 14, 1922, notified the partnership of said assessment and demanded payment thereof. Thereupon, the partnership filed an abatement claim which, on June 11, 1926, was denied in full by respondent. The petition herein was filed with the Board August 9, 1926.

On February 25, 1926, a so-called "Income and Profits Tax Waiver" was executed by George U. Hind on behalf of Hind Rolph & Co., reading as follows:

S. F. Feby. 25/1926. (Date)

INCOME AND PROFITS TAX WAIVER

In order to enable the Bureau of Internal Revenue to give thorough consideration to any claims for abatement or credit filed by or on behalf of Hind Rolph & Co. of San Francisco, covering any income, excess-profits or war-profits tax assessed against the said taxpayer under the existing or prior Revenue Acts for the year(s), 1917, and to prevent the immediate institution of a proceeding for the collection of such tax prior to the expiration of the six year period of limitation after assessment within which a distraint or a proceeding in court may be begun for the collection of the tax, as provided in Section 278(d) of the existing Revenue Act, the said taxpayer hereby waives any period of limitation as to the time within which distraint or a proceeding in court may be begun for the collection of the tax, or any portion thereof, assessed for the said year(s), and hereby consents to the collection thereof by distraint or a proceeding in court begun at any time prior to the expiration of this waiver.

This waiver is in effect from the date it is signed and will remain in effect until December 31, 1926.

HIND ROLPH & CO. Taxpayer. By GEO. U. HIND Member of firm.

If this waiver is executed on behalf of a corporation, it must be signed by such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which, the seal, if any, of the corporation must be affixed.

On December 8, 1926, a so-called "Tax Collection Waiver" was executed by George U. Hind, acting for Hind Rolph & Co., and John C. McLaughlin, acting for the Commissioner of Internal Revenue, reading as follows:

TAX COLLECTION WAIVER.

DECEMBER 8, 1926.

It is hereby agreed by and between Hind Rolph & Co., of 230 California St., San Francisco, Calif., party of the first part, and the Commissioner of Internal Revenue, party of the second part, that the amount of $199,611.29, representing an assessment of income tax for the year(s) 1917 made against the said _____________ (kind of tax) party of the first part, appearing on the 1921 Dec. assessment list, page 52, Line 2, for the First district of California, may be collected (together with such interest, penalties, or other additions as are provided for by law) from said party of the first part by distraint or by a proceeding in court begun at any time prior to December 31, 1927.

(Signed) HIND ROLPH & CO. (Taxpayer) By GEO. U. HIND, Partner. D. H. BLAIR Commissioner of Internal Revenue. By JOHN C. McLAUGHLIN Collector of Internal Revenue.

If this waiver is executed on behalf of a corporation, it must be signed by such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which, the seal, if any, of the corporation must be affixed.

OPINION.

LITTLETON:

Since the year 1917 only is before us, and since it appears that the statute of limitations question is determinative of petitioner's liability for the entire proposed deficiency for that year, we have omitted from our findings many of the facts relating solely to the question of the correctness of the Commissioner's computation.

The statute of limitations issue before us involves an additional tax for 1917 which was assessed in December, 1921, but which has not yet been collected, and our question is whether the collection of this...