Nicholson v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 16 March 1931 |
| Docket Number | Docket No. 21157. |
| Citation | 22 BTA 744 |
| Parties | M. A. NICHOLSON AND BIG CHIEF LEASE, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Paul W. Crawford, Esq., for the petitioners.
Eldon McFarland, Esq., for the respondent.
The taxes involved in this proceeding amount to $4,940.19, and are income and profits taxes assessed against the Big Chief Lease, a partnership, for the year 1917, and asserted against M. A. Nicholson, petitioner, as transferee of the assets of said partnership, under the provisions of section 280 of the Revenue Act of 1926. The case was submitted on the pleadings, a brief stipulation of facts, and certain exhibits introduced at the hearing.
Big Chief Lease joined in the appeal, but the notice of liability attached to the petition is addressed to petitioner, M. A. Nicholson, only. No deficiency notice to Big Chief Lease is shown. We have no jurisdiction to entertain an appeal from a party unless a deficiency notice is shown. Accordingly, the appeal as to Big Chief Lease is dismissed for lack of jurisdiction.
The Big Chief Lease, a partnership of which petitioner was one of the partners, was dissolved in or about the year 1918, and since that time has had no assets. At the time of the dissolution of the partnership, a portion of its assets, the net value of which was in excess of the tax liability asserted in this proceeding, was distributed to petitioner. The determination of the tax against the transferor partnership is shown by the following statement attached to the deficiency notice, which was mailed to petitioner, M. A. Nicholson, September 10, 1926:
1917
Deficiency in Tax _________________________________ $4,940.19
In office letter dated November 19, 1924, you were advised that after careful consideration and review, your application for assessment of your excess profits tax under the provisions of Section 210 of the Revenue Act of 1917 had been allowed. Your excess profits tax is based upon a comparison with a group of representative concerns which, in the aggregate, may be said to be engaged in a like or similar trade or business to that of your company.
As a mining partnership in Colorado is not a partnership within the meaning of the Statutes, but an association, it must be treated as a corporation for income and excess profits tax purposes.
The result of the audit under the above-mentioned provisions is as follows:
Net Income
Net income as reported in return ____________________ $24,817.99
Computation of Tax __________________________________ 7,807.74
Excess profits tax (Section 210) ____________________
Net income ______________________________ $24,817.99
Less: Profits tax _______________________ 7,807.74
__________
Income subject to tax at 2% and 4% ______ $17,010.25
Tax at 2% and 4% ____________________________________ 1,020.62
__________
Total tax liability _________________________________ $8,828.36
Credits: Original tax ___________________ $1,505.44
Amount paid August 18, 1923 _________ 1,989.26 3,888.17
_____________________
Balance due _________________________________________ $4,940.19
None of the foregoing sum of $4,940.19 has been paid. It is clear that petitioner is a transferee of the assets of the taxpayer (Big Chief Lease) and is liable for whatever taxes are legally due, he having received property of a greater value than the amount of the tax which the respondent is asserting in this proceeding. J. W. Oglesby, 16 B. T. A. 1191; John Gerosa, 21 B. T. A. 1234. Petitioner in his petition did not plead the statute of limitations as a bar to the claim asserted by the respondent, but at the hearing, by permission of the Board, filed a motion reading as follows:
MOTION FOR JUDGMENT ON THE PLEADINGS.
Comes now the petitioner, M. A. Nicholson, and moves this honorable board that judgment be entered in his behalf according to the prayer in the petition heretofore filed for the following reasons, to-wit:
1. That under the decisions of your honorable board, and under the decision of the Supreme Court of the United States the tax liability of the taxpayer, the Big Chief Lease, was extinguished by the statute of limitations as contained in the Revenue Act of 1926, as shown by Section 1106 (a) thereof.
As shown by the pleadings herein on or about the month of February 1923 the Commissioner of Internal Revenue, through his deputies and agents, made an additional assessment of income and profits taxes against the Big Chief Lease; that as to such assessment no suit or proceeding was started within the period prescribed by law, in which it is provided, that a suit or proceeding to collect assessments of income and profits taxes must be commenced within 5 years after the filing of return, and to this date no such suit or proceeding has been commenced by the department; that under Section 1106 (a) the failure to commence such suit or proceeding extinguishes the liability of taxpayer, and therefor extinguishes the liability of petitioner as transferee.
One of the things necessary for us to know, in determining whether the statute of limitations has run against the assessment and the collection of the tax, is when taxpayer filed his tax return. Edward M. Lawrence 3 B. T. A. 40; E. J. Lorie, 21 B. T. A. 612, In the instant case the tax return of Big Chief Lease for 1917 was not introduced in evidence and we have no proof whatever when such return was filed. Neither the petition nor the motion filed at the hearing, already copied in this opinion, give us any information as to when this...
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