Powers v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 27 October 1932 |
| Docket Number | 61846.,Docket No. 47836,48007,51029,50575 |
| Citation | 26 BTA 1381 |
| Parties | LELAND POWERS, EXECUTOR OF THE ESTATE OF SAMUEL L. POWERS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. STANLEY R. MILLER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. WINTHROP COFFIN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. HENRY I. HARRIMAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Melville F. Weston, Esq., and Stanley R. Miller, Esq., for the petitioners.
Harold Allen, Esq., for the respondent.
These proceedings, duly consolidated for hearing, are for the redetermination of deficiencies in income tax for the years and in amounts as follows:
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Docket | Petitioner | Year | Deficiency
No. | | |
-------|------------------------------------------------------------------|------|-----------
47836 | Leland Powers, executor of the estate of Samuel L. Powers ______ | 1927 | $553.44
48007 | Stanley R. Miller ______________________________________________ | 1926 | 240.89
48007 | ____ do ________________________________________________________ | 1927 | 334.36
50575 | ____ do ________________________________________________________ | 1928 | 226.92
51029 | Winthrop Coffin ________________________________________________ | 1927 | 934.29
61846 | Henry I. Harriman ______________________________________________ | 1929 | 955.66
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For convenience, Docket No. 47836 will be treated as though the decedent, whose income is in issue, were the petitioner. The petitioners allege that the respondent erred in including in their taxable incomes the compensation each received as a trustee of the Boston Elevated Railway Company for the respective years. The proceedings were submitted upon the pleadings and stipulations.
FINDINGS OF FACT.
The petitioners are residents of the Commonwealth of Massachusetts.
Prior to the taxable years under consideration, the petitioners were appointed members of the board of trustees of the Boston Elevated Railway Company under the provisions of chapter 159 of the Special Acts of 1918 of the Commonwealth of Massachusetts, "An Act to provide for the Public Operation of the Boston Elevated Railway Company," which reads in part as follows:
SECTION 1. The board of trustees of the Boston Elevated Railway Company is hereby created, to consist of five persons to be appointed by the governor, with the advice and consent of the council. The persons so appointed shall be sworn before entering upon the performance of their duties; shall own no stock or other securities of the Boston Elevated Railway Company or of any company owned, leased or operated by it; shall serve for the term of ten years from the date when they assume the management of the company as hereinafter provided and until their successors are duly appointed and qualified, and each shall receive from the company as compensation for his services five thousand dollars annually. * * *
Said trustees shall not be considered public officers within the meaning of section twenty-five of chapter five hundred and fourteen of the acts of nineteen hundred and nine, but shall be subject in all other respects to the provisions of said section to the same extent as are the directors of the Boston Elevated Railway Company, but said section shall not apply to recommendations by the governor to said trustees. * * *
If the public management and operation of the railway system of the Boston Elevated Railway Company shall continue beyond the original period of ten years the governor shall, with the advice and consent of the council, at the expiration of each ten-year period during the continuance of public management and operation, appoint five successor trustees to serve for a period of ten years, and until their successors are appointed and qualified, but not exceeding the period of public management and operation. * * *
SECTION 2. Said board of trustees, hereinafter called the trustees, shall manage and operate the Boston Elevated Railway Company, hereinafter called the company, and the properties owned, leased or operated by it, for a period of ten years, commencing on the first day of the month next after their appointment and qualification, and subject to the provisions of this act, shall take and have possession of said properties in behalf of the commonwealth during the period of public operation, and, for the purposes of this act, shall, except as is otherwise provided in this act have and may exercise all the rights and powers of said company and its directors, and, upon behalf of said company, shall receive and disburse its income and funds. * * * They shall have the right to regulate and fix fares, including the issue, granting and withdrawal of transfers, and the imposition of charges therefor, and shall determine the character and extent of the service and facilities to be furnished, and in these respects their authority shall be exclusive and shall not be subject to the approval, control or direction of any other state board or commission.
In the management and operation of the said company and of the properties owned, leased or operated by it, as authorized by this act, the trustees and their agents, servants and employees shall be deemed to be acting as agent of the company and not of the commonwealth, and the company shall be liable for their acts and negligence in such management and operation to the same extent as if they were in the immediate employ of the company, but said trustees shall not be personally liable. * * * Nothing herein contained shall be held to affect the right of the commonwealth or any subdivision thereof to tax the company or its stockholders in the same manner and to the same extent as if the company had continued to manage and operate its own property.
SECTION 3. The trustees shall have authority to make contracts in the name and on behalf of, and to issue stocks, bonds and other evidences of indebtedness of, the company. * * *
* * * The trustees shall cause to be paid all amounts which may from time to time become due from the company, and shall declare dividends at the appointed times upon the preferred and common stock of the company, and provide for the payment of the same.
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SECTION 6. The trustees shall from time to time, in the manner hereinafter provided, fix such rates of fare as will reasonably insure sufficient income to meet the cost of the service, which shall include operating expenses, taxes, rentals, interest on all indebtedness, such allowance as they may deem necessary or advisable for depreciation of property and for obsolescence and losses in respect to property sold, destroyed, or abandoned, all other expenditures and charges which under the laws of the commonwealth now or hereafter in effect may be properly chargeable against income or surplus, fixed dividends on all preferred stock of the company from time to time outstanding, and dividends on the common stock of the company from time to time outstanding at the rate of five per cent per annum on the par value thereof during the first two years, five and one half per cent per annum on the par value thereof during the next two years and six per cent per annum on the par value thereof during the balance of the period of public operation. * * *
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SECTION 11. If, as of the last day of June in the year nineteen hundred and nineteen, or the last day of any December or June thereafter, the amount remaining in the reserve fund shall be insufficient to meet the deficiency mentioned in section nine, it shall be the duty of the trustees to notify the treasurer and receiver general of the commonwealth of the amount of such deficiency, less the amount, if any, in the reserve fund applicable thereto, and the commonwealth shall thereupon pay over to the company the amount so ascertained. * * * If, as of the last day of any June or December thereafter during the period of public operation, the reserve fund shall exceed the amount originally established, the trustees shall apply the excess, so far as necessary, to reimbursing the commonwealth for any amounts which it may have paid to the company under the provisions hereof, and the commonwealth shall thereupon distribute the amount so received among the cities and towns in which the company operates, in proportion to the amounts which they have respectively been assessed as provided in section fourteen.
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SECTION 12. Notwithstanding anything contained in this act, the public management and operation of the railway system of the company shall continue after the expiration of said ten year period upon the terms and conditions herein specified until such time as the commonwealth shall elect to discontinue such public management and operation. The commonwealth shall have the right to terminate such public management and operation, either at the expiration of the said ten year period or at any time thereafter, by appropriate legislation passed not less than two years before the date fixed for such termination.
SECTION 13. It shall be the duty of the trustees to maintain the property of the company in good operating condition and to make such provision for depre ciation, obsolescence and rehabilitation, that, upon the expiration of the period of public management and operation, the property shall be in good operating condition. If the period of public management and operation expires, control of the property shall then revert to the company, and if at that time the reserve fund shall be less than the amount originally established because the income during...
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