Independent Life Insurance Co. of America v. Commissioner of Internal Revenue
| Citation | 17 BTA 757 |
| Decision Date | 04 October 1929 |
| Docket Number | Docket No. 25295. |
| Parties | INDEPENDENT LIFE INSURANCE CO. OF AMERICA, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
James A. Newman, Esq., for the petitioner.
E. C. Lake, Esq., for the respondent.
The Commissioner notified petitioner of a determination of deficiencies in income tax of $298.97 for 1923 and $1,115.65 for 1924. Petitioner attacks this determination as contrary to the Revenue Act of 1921, sections 242 et seq., and similar sections of the Revenue Act of 1924, and, if necessary, contrary to the Constitution.
The facts are presented in the following stipulation:
It is hereby stipulated and agreed by and between the parties to the above entitled appeal, by their respective counsel:
(1) That the petitioner, Independent Life Insurance Company of America, is a life insurance company, with its home office located at Nashville, Tennessee.
(2) That on January 25, 1927, the respondent mailed to the petitioner a notice of deficiency, showing proposed deficiencies for the calendar years 1923 and 1924 in the amounts of $298.97 and $1,115.65, respectively. A copy of said notice of deficiency is attached hereto as Exhibit A, if being agreed that the book value of petitioner's building for the years 1923 and 1924 and the amounts shown therein as rents received from other tenants covering space occupied by others than the Company, are correct and the facts in this case.
(3) That during the years 1923 and 1924, the petitioner owned a twelve story building located in the city of Nashville, Tennessee. The petitioner in 1923 and 1924 occupied about one story of said building as its home office and rented such portions of the remainder of the building as it was able to secure tenants for.
JAN. 25, 1927. INDEPENDENT LIFE INSURANCE COMPANY Independent Life Building Corner Fourth and Church Streets, Nashville, Tennessee.
In connection with the above adjustment of gross income with respect to rents, your attention is invited to Article 686, Regulations 62, which reads in part as follows:
You are advised that the amount, $11,376.81, representing permanent improvements, has been eliminated from expenses in accordance with Section 245 (a) (6) of the Revenue Act of 1921.
Computation of tax
Net Income ______________________________________________ $5,294.68
Less: Exemption _________________________________________ 2,000.00
__________
Taxable at 12½% _________________________________________ 3,294.68
Tax at 12½% ________________________________________________________ $411.83
Previously assessed ________________________________________________ 112.86
___________
Deficiency in tax __________________________________________________ 298.97
1924
Income:
Interest from all sources ______________________________________ 20,519.85
Rents __________________________________________________________ 105,689.29
___________
Gross income BS: 3 ___________________________________________ 126,209.14
Deductions:
Interest exempt _____________________________________ $1,687.81
Excess of 4% of mean of reserve over exempt interest 22,773.76
Investment expenses _________________________________ 2,220.34
Taxes _______________________________________________ 11,147.00
Other real estate expenses __________________________ 67,271.97
Depreciation ________________________________________ 7,500.00
Interest ____________________________________________ 868.69
__________
Total deductions _____________________________________________ 113,469.57
____________
Adusted net income ___________________________________________ 12,739.57
The adjustment for rents is made for the same reason as given in 1923. The computation is as follows:
Your return for the year 1922 has been closed, showing no tax liability.
You are advised that the contentions contained in your letter dated November 26, 1926, have been...
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