Sitterding v. Commissioner of Internal Revenue

Decision Date06 January 1936
Docket NumberNo. 3961-3963.,3961-3963.
Citation80 F.2d 939
PartiesSITTERDING v. COMMISSIONER OF INTERNAL REVENUE (three cases).
CourtU.S. Court of Appeals — Fourth Circuit

Frank J. Albus, of Washington, D. C., for petitioner.

L. W. Post, Sp. Asst. to the Atty. Gen. (Frank J. Wideman, Asst. Atty. Gen., and Sewall Key, Sp. Asst. to the Atty. Gen., on the brief), for respondent.

Before NORTHCOTT and SOPER, Circuit Judges, and CHESNUT, District Judge.

NORTHCOTT, Circuit Judge.

These are petitions for review of decisions of the United States Board of Tax Appeals, involving income taxes of the petitioners for the year 1929. The decision of the board was entered May 4, 1935. The three cases were consolidated and it was stipulated that the decision in one case would control the other two cases.

The Board of Tax Appeals filed no separate findings of fact, but the material facts are stated in the decision of the board and the petition here discussed will be that of Agnes Sitterding in case No. 3961.

The petitioner is an individual residing at Richmond, Va. Her father, Fritz Sitterding, died testate April 14, 1928, and two of his sons and the Virginia Trust Company qualified as executors of the estate in April, 1928. The inventory of the estate filed by the executors valued the assets of the estate at approximately $3,000,000. The will of the deceased directed his executors to set aside and hold in trust $300,000, the income from this trust to be divided quarterly among his three children. The balance of the estate was also to be equally divided among his three children. At the time of the decision of the Board of Tax Appeals the estate was still in the process of administration.

During the year 1929 the executors and trustees made three distributions to the beneficiaries as follows:

                                     Agnes      William H.     Fred B
                      Date         Sitterding   Sitterding   Sitterding
                  Jan. 30, 1929    $7,242.59    $7,242.59    $7,242.58
                  July 30, 1929     3,746.84     3,746.84     3,746.84
                  Oct. 30, 1929     5,451.45     5,451.45     5,451.45
                                  _____________________________________
                      Total        16,440.88    16,440.88    16,440.87
                

The record kept by the executors for the estate contained an account entitled "Income Account" and an account entitled "Principal Account." The above distributions were charged to and entered in such income account on the above dates and in the above amounts, with an explanation as follows:

                                                        Income
                  Miss Agnes Sitterding ................  1/3
                  W. H. Sitterding .....................  1/3
                  To a/c (or "acc't") Fred B. Sitterding
                   .....................................  1/3
                

Such distributions exhausted the funds as reflected in the credit balance in the income account at the respective dates of distribution.

During the calendar year 1929 the estate had a gross income of $96,998.84, and in March of that year the executors paid a federal estate tax in the amount of $34,555.56, and in April of the same year paid state inheritance tax in the amount of $138,582.41, both of which payments were charged, on the books kept by the executors, to the principal account. The Virginia Trust Company advanced the executors the money to make these federal and state tax payments to the extent that they did not have the money on hand with which to make them.

The respondent increased the reported net income of the petitioner, for the year 1929, by adding thereto the amount of $16,440.88 as representing total distributions from the estate including the amount received from the trust fund and, upon review by the Board of Tax Appeals, the respondent's action was sustained and this petition for review was filed. Petitioner agrees that the amount received from the trust fund, $1,781.25, should be added to the reported income.

The sole question here involved is whether the board was correct in sustaining the action of the Commissioner in adding $14,659.63 to petitioner's 1929 income as a distribution of income received from her father's estate, or whether such amount was distributed from corpus, as contended by petitioner.

The statutes involved are sections 22 (b) (3), section 23 (c) and section 162 (b, c) of the Revenue Act of 1928 (26 U.S.C.A. §§ 22 and note, 23 note, 162 and note) and Treasury Regulations 74, arts. 83, 154, 862, and 863.

It is first urged on behalf of the respondent that the record, as prepared for this court, contains no statement of evidence whatsoever, and that the board's findings of fact are not here reviewable to determine whether they are supported by substantial evidence. Commissioner v. Continental Screen Company (C.C.A.) 58 F.(2d) 625; Evergreen Cemetery Ass'n v. Burnet, 59 App.D.C. 397, 45 F.(2d) 667. While this is undoubtedly the correct rule of law, there are incorporated in the decision of the board findings of ultimate facts and it is not necessary to quote authorities to the effect that we can review the action of the board in applying the law to the facts so found.

It is uniformly held that "under the revenue acts taxable income is computed for annual periods." That the revenue acts uniformly assess the tax on the basis of annual returns is unquestioned. Burnet v. Sanford & Brooks Co., 282 U.S. 359, 51 S.Ct. 150, 75 L.Ed. 383; Burnet v....

To continue reading

Request your trial
20 cases
  • Chicago, Burlington & Quincy R. Co. v. United States
    • United States
    • U.S. Claims Court
    • February 18, 1972
    ...117 F.2d 364, 368 (1st Cir. 1941); Commissioner v. North Jersey Title Ins. Co., 79 F.2d 492, 493 (3d Cir. 1935); Sitterding v. Commissioner, 80 F.2d 939, 941 (4th Cir. 1936); Commissioner v. Landers, Corp., 210 F.2d 188, 192 (6th Cir. 1954); Northwestern States Portland Cement Co. v. Huston......
  • Simon v. Hoey
    • United States
    • U.S. District Court — Southern District of New York
    • April 20, 1949
    ...2 Cir., 1938, supra, the Court also considered the argument made by the taxpayer-legatee based on Sitterding v. Commissioner of Internal Revenue, 4 Cir., 1936, 80 F.2d 939, that payments of estate taxes by the executor should be marshalled against the income of the estate, but the Circuit C......
  • Western Maryland Railway Company v. United States
    • United States
    • U.S. District Court — District of Maryland
    • May 18, 1955
    ...particular ways and to draw certain inferences from the way the entries were handled. But, as the Fourth Circuit said in Sitterding v. Commissioner, 80 F.2d 939, 941, "The bookkeeping creates nothing, and the question must be decided according to proven and established The testimony of the ......
  • LASHELLS'ESTATE v. Commissioner of Internal Revenue
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • December 4, 1953
    ...but they are not conclusive. Taxability depends upon the facts, not the bookkeeping entries employed by the taxpayer. Sitterding v. Commissioner, 4 Cir., 80 F.2d 939, 941; Northwestern States Portland Cement Co. v. Huston, 8 Cir., 126 F.2d 196, 199. We agree with the ruling of the Tax Court......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT