Philadelphia Brewing Co. v. United States, 43429.

• Decision Date: 19 June 1939
• Docket Number: No. 43429.,43429.
• Citation: 27 F. Supp. 583
• Parties: PHILADELPHIA BREWING CO. v. UNITED STATES.
• Court: U.S. Claims Court

27 F. Supp. 583

PHILADELPHIA BREWING CO. v. UNITED STATES.

No. 43429.

Court of Claims.

May 29, 1939.

Supplemental Opinion June 19, 1939.

COPYRIGHT MATERIAL OMITTED

Theodore B. Benson, of Washington, D. C. (Charles E. Foster, Jr., of Washington, D. C., on the brief), for plaintiff.

Elizabeth B. Davis, of Washington, D. C., and James W. Morris, Asst. Atty. Gen. (Robert N. Anderson and Fred K. Dyar, both of Washington, D. C., on the brief), for the United States.

Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.

LITTLETON, Judge.

By section 215¹ (a), (d), and (f), of the National Industrial Recovery Act, 48 Stat. 195, 207, 208, a capital stock tax was imposed on the adjusted declared value of the capital stock of domestic corporations. In section 216² (a) an excess-profits tax was imposed for each income-tax year subsequent to June 30, 1933. Regulations 64 (1933 Edition) were promulgated by the Treasury Department for the administration of the capital stock and excess profits tax act, and Art. 24 thereof provided as follows:

"Adjusted declared value. — Pursuant to the foregoing provisions of the Act each domestic corporation is required to declare a value for its entire capital stock as of the close of the last income-tax taxable year ending on or prior to June 30, 1933, or as of the date of organization in the case of a corporation having no income-tax taxable year ending on or prior to that date. This value once having been declared may not subsequently be changed either by the corporation or by the Commissioner.

"It should be borne in mind that the original declared value will not only be used as the basis of payment of the capital stock tax for the first taxable year ended June 30, 1933, but that it will also be a primary factor in the computation of capital stock taxes for later years and the excess-profits tax imposed by section 216 of the Act."

Art. 55 of these regulations as originally promulgated provided as to the time for making the return that "It shall be the duty of every corporation to make a return for each taxable year during the month of July next following the end of such year, or later in case the time for filing is officially extended by the Commissioner under these regulations." Subsequently the time for filing the capital stock tax return for the fiscal year ending June 30, 1933, for which year domestic corporations were required by statute to make a declaration of the value of their capital stock, was officially extended by the Commissioner to September 29, 1933.

Sections 215 and 216, above-mentioned, levied new taxes. A capital stock tax was imposed for the fiscal year ending June 30, 1933, and for each year thereafter, and an excess-profits tax was levied for each income tax year ending after the close of the first capital stock tax year. The capital stock tax for the first year was imposed upon the value of the capital stock declared by the taxpayer and referred to in the statute as the adjusted declared value. For subsequent years the tax was imposed on the basis of the declared value with the authorized statutory adjustments. The excess-profits tax was imposed and measured by the "adjusted declared value" declared by the corporation for the first taxable year, that is, the declared value as of the close of the corporation's last taxable year ending on or before June 30, 1934. The capital stock tax was imposed for each year ending June 30 and the excess-profits tax for each income taxable year. Congress expressly declared its intent that the original declared value in the capital stock tax return for the first taxable year under the statute should be used in determining the capital tax for subsequent years and that the adjusted declared value as of the close of the preceding income tax year should be used in determining the excess profits for each year. The amount of $12,420.13 sued for represents the alleged overpayment of $13,705.09 excess-profits tax, and $564.03 income tax, and interest of $150.01 paid for the calendar year 1933 less $1,999, capital stock tax admitted to be due and tendered by plaintiff for the first taxable year ending June 30, 1933.

In the case at bar, the plaintiff, before it had made a complete investigation for the purpose of determining the value of its capital stock, prepared and filed a capital stock tax return on August 4, 1933, in which it stated the value of its capital stock in the amount of $1,500,000. This return was prepared by plaintiff's president, who arrived at the amount of this value on the basis of the estimated earnings of the corporation, but at the time he did not have before him an accurate audit and statement of the earnings of the corporation; a complete audit of the books and records of the corporation by a qualified accountant had not at that time been made. Plaintiff's president did not at that time have full knowledge of the actual facts. Shortly afterward, and still within the time allowed by statute and the Commissioner's regulations authorized and made pursuant thereto within which the plaintiff could file its capital stock tax return for the year ending June 30, 1933, and make the declaration of value of the capital stock as required by the statute, the plaintiff after a complete audit of its books and on the basis of the earnings for the full year which it capitalized, determined and declared to the Commissioner in a corrected capital stock tax return, in lieu of and as a substitute for the return theretofore submitted on August 4, 1933, a declared value of its capital stock of $3,499,999 to be used as the declared value in its return for the first year and subsequent years for the purpose of the capital stock and excess-profits tax. This declared value, which was set forth in a corrected capital stock tax return, was made and the corrected return was filed with the collector September 23, 1933, before the expiration of time allowed by the statute and the regulations for filing the 1933 return and for declaring the value of capital stock for its first taxable year for the purpose of the capital stock and excess-profits tax imposed by sections 215 and 216. The time...