Rictor v. Comm'r of Internal Revenue

• Citation: 26 T.C. 913
• Decision Date: 08 August 1956
• Docket Number: Docket No. 55334.
• Parties: JOHN R. RICTOR AND KAY RICTOR, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: United States Tax Court

26 T.C. 913

JOHN R. RICTOR AND KAY RICTOR, PETITIONERS,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 55334.

Tax Court of the United States.

Filed August 8, 1956.

Samuel M. Baker, Esq., for the petitioners.

George J. Rabil, Esq., for the respondent.

1. ESTIMATED TAX— ADDITIONS TO TAX— CONCURRENT IMPOSITION OF ADDITIONS FOR SUBSTANTIAL UNDERESTIMATE AND FAILURE TO FILE.— Imposition of addition to tax for substantial underestimate of estimated tax (sec. 294(d)(2), I.R.C. 1939) and addition to tax for failure to file (sec. 294(d)(1)(A)) may be concurrently imposed. G. E. Fuller, 20 T.C. 308, followed.

2. ESTIMATED TAX— ADDITIONS TO TAX— BASE UNCHANGED FOR NET OPERATING LOSS CARRYBACK.— Tax correctly shown on file return for tax year 1950 is proper base for computation of additions to tax under sections 294(d)(1)(A) and 294(d) (2), I.R.C. 1939, without subsequent adjustment by reason of net operating loss carryback from 1951.

OPINION.

MURDOCK, Judge:

The Commissioner determined for 1950 an addition to income tax of $696.17 under section 294(d)(2) of the Internal Revenue Code of 1939, for substantial underestimate of estimated tax and an addition of $1,044.25 under section 294(d)(1)(A) for failure to file declarations of estimated tax. The facts have been stipulated.

The petitioners have made no showing that their failure to file declarations of estimated tax for 1950 was due to reasonable cause and not to willful neglect. The statute contains no provision excusing an understatement on showing of reasonable cause.

The petitioners recognize that this Court has consistently upheld the propriety of additions to tax for failure to file a declaration of estimated tax and the concurrent imposition of the addition to tax for a substantial underestimate of estimated tax pursuant to the provisions of the Internal Revenue Code of 1939 (see G. E. Fuller, 20 T.C. 308; Fred N. Acker, 26 T.C. 107), but urge that that conclusion is erroneous and should be overruled. We will abide by those decisions.

The only remaining issue is whether the percentage additions to tax should be computed on the basis of the amount of the tax correctly reported by the petitioners in their final return for 1950 ($11,602.86) or on the amount of the tax for 1950 as finally computed after application of a net operating loss carryback from 1951 ($7,809.92). The Commissioner does not mention this issue in his brief. Section 294(d)(1)(A) Specifically provides that the additions to the tax for failure to file a declaration of estimated tax are to be computed upon installments of the estimated tax due but unpaid at the times required during the taxable year. Obviously, those amounts are not affected by any carryback to the taxable year from a subsequent year, a factor unknown at the time the installments became due. Neither that section nor section 294(d)(2) imposing additions to the tax for substantial underestimate of the tax indicates that Congress had any concern whatever with reductions in the ultimate tax for the taxable year by reason of the carryback provisions which have the effect of reducing the tax for the taxable...