Moise v. Burnet, 6179-6182.
| Decision Date | 12 October 1931 |
| Docket Number | No. 6179-6182.,6179-6182. |
| Citation | 52 F.2d 1071 |
| Parties | MOISE v. BURNET, Com'r of Internal Revenue. SCHLESINGER v. SAME (three cases). |
| Court | U.S. Court of Appeals — Ninth Circuit |
Jerome H. Bayer, of San Francisco, Cal. (Brewster & Ivins, of Washington, D. C., Leon M. Shimoff, of San Francisco, Cal., and F. E. Youngman, of Washington, D. C., of counsel), for petitioners.
G. A. Youngquist, Asst. Atty. Gen., Sewall Key and Helen R. Carloss, Sp. Assts. to Atty. Gen. (C. M. Charest, Gen. Counsel, and Stanley Suydam, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., of counsel), for respondent.
Before RUDKIN, WILBUR, and SAWTELLE, Circuit Judges.
These four cases, consolidated in the former hearing because of the exact similarity of the points at issue, are here on a petition to review orders of the United States Board of Tax Appeals.
The facts, as stated by the Board of Tax Appeals and petitioners' brief, are as follows: Leon L. Moise, Gerald F. Schlesinger, and Le Roy Schlesinger were equal partners in the firm of Schlesinger & Bender, of San Francisco, Cal., a company engaged in the wholesale liquor business from the time of its formation, July 1, 1918, until January 16, 1920, the date of its dissolution and termination of business. Prior to the formation of the partnership, the business of the three individuals had been conducted in the same location by a corporation.
On December 31, 1918, the partnership, believing that it would be compelled to terminate its business in 1920 by reason of the National Prohibition Act, and believing that its leasehold improvements and equipment would be wholly obsolete at that time, charged off its books as a loss the amounts of $7200, the balance remaining in its "Building" account, and $13,965.03, the balance remaining in its "Furniture and Fixtures" account. In 1920, when the business was closed, the partnership sold its furniture and equipment and the premises were vacated shortly after April 1, 1920.
The partnership filed returns for the period from July 1, 1918, to December 31, 1918, and for the years 1919 and 1920. In its return for the six months' period from July 1, 1918, to December 31, 1918, the partnership claimed as a deduction from gross income the sum of $21,848.60 as exhaustion, wear, and tear (including obsolescence) of its tangible properties. The Commissioner disallowed this sum as deduction and refused to allow any amount as a reduction for the obsolescence of tangible property of the partnership.
In its return for the year 1920, the partnership included in its gross income the sum of $7,801.18, representing the proceeds received from sales of cooperage, scrap, and office furniture.
In its returns filed for the period from July 1, 1918, to December 31, 1918, and for the years 1919 and 1920, the partnership claimed certain amounts therein as deductions from gross income for the obsolescence of good will. The Commissioner, in a letter dated October 22, 1924, informed the partnership that the correct amount of $52,814.70 was allowed the partnership as obsolescence of good will for prohibition purposes, and indicated its distribution over the three years 1918, 1919, and 1920.
Each of the petitioners involved in these proceedings filed individual income tax returns covering the years in which deficiencies have been asserted. Leon L. Moise filed his return for 1918 not later than March 15, 1919, and the last waiver he executed for that year extended the statutory period to December 31, 1925. The return of Moise for 1919 was filed not later than March 15, 1920, and the last waiver executed for that year expired December 3, 1925. The return of Moise for 1920 was filed April 7, 1921, no waivers were signed, and the taxes became barred on April 7, 1926.
Gerald F. Schlesinger filed his income tax return for 1918 not later than March 22, 1919, and signed waivers which extended the statutory period to December 31, 1925. The return of Gerald F. Schlesinger for 1919 was filed March 15, 1920, and the last waiver for that year expired December 31, 1925. The return for the year 1920 was not in dispute.
Le Roy Schlesinger filed his income tax return for 1918 not later than March 15, 1919, and the final waiver for that year expired March 1, 1925. His income tax return for the year 1920 was filed April 6, 1921, and therefore became barred April 6, 1926, as no waivers for that year were signed. The year 1919 was not in dispute.
In the latter half of 1925 the Commissioner of Internal Revenue mailed four deficiency letters: one to Leon L. Moise, covering the years 1918, 1919, and 1920, and determining a deficiency of $5,032.20; one to Gerald F. Schlesinger, covering the years 1918 and 1919 and determining a deficiency of $4,657.96; and two to Le Roy Schlesinger, of which one, involving the year 1920, determined a deficiency of $153.08, and the other, involving the year 1918, rejected a claim in abatement for $414.99. From each of these four letters the taxpayer receiving it filed an appeal with the United States Board of Tax Appeals, claiming error on the part of the Commissioner with respect to such portion of the alleged deficiency as arose from disallowance of a deduction for obsolescence of tangible assets of the partnership business, and alleging that all taxes and deficiencies for the years in question were forever barred by the statutes of limitation applicable thereto.
An answer and an amended answer were filed by the Commissioner in each of the four appeals. In each one of the latter there were allegations similar to those in the Leon L. Moise case (No. 6179), which read as follows:
The four proceedings were tried together before the Board on May 4, 1927. The decision of the Board, promulgated on September 25, 1928, was adverse to the taxpayers on all points. Not only did it uphold in entirety the deficiencies claimed in the sixty-day letters from which the appeals were taken, but in addition it determined greatly increased deficiencies. In December, 1928, the Board made an order of redetermination under Rule 50 in each of the four cases, fixing the total deficiency of Leon L. Moise at $9,633.30, that of Gerald F. Schlesinger at $9,031.54, and that of Le Roy Schlesinger at $1,748.87.
From this hearing and these orders come these appeals.
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