Spaid v. United States, 6091.
| Citation | 28 F. Supp. 670 |
| Decision Date | 12 December 1938 |
| Docket Number | No. 6091.,6091. |
| Parties | SPAID et al. v. UNITED STATES. |
| Court | U.S. District Court — District of Maryland |
Caesar Aiello and George E. Elliott, both of Washington, D. C., for plaintiffs.
Bernard J. Flynn, U. S. Atty., and G. Randolph Aiken, Asst. U. S. Atty., both of Baltimore, Md., James W. Morris, Asst. Atty. Gen., and Thomas G. Carney, John G. Remey, and Andrew D. Sharpe, Sp. Assts. to Atty. Gen., for the United States.
This is a companion case to that of John S. Flannery et al. v. United States, D.C., 25 F.Supp. 677, in which a full opinion has this day been filed. In both cases the facts, fully stipulated, are the same except as to the amounts of the income and tax thereon applicable to the two partners, Hibbs and Spaid. The principles of law affecting both cases are the same. It is therefore unnecessary to repeat the discussion in the opinion filed in the Flannery case relating to the income and tax of the partner Hibbs. In the present case (affecting the partner Spaid) the amount of additional income computed by the Commissioner as Spaid's share of the profit on the sale of the one-quarter interest in the Stock Exchange seat and alleged to have been realized for the period of March 1, 1913 through September 30, 1928, was $24,330.97. Upon this additional income so computed Spaid paid taxes in the amount of $3,041.37 and interest thereon of $386.66, the total of which, $3,428.03, is the principal amount sought to be recovered in this suit.
For the reasons given in the opinion in the Flannery case I have concluded as a matter of law that the partner Spaid was not taxable for the year 1929 on the item of $24,330.97 in controversy. I therefore hold as a matter of law that the plaintiff is entitled to recover the sum sued for but with the following stated deduction.
Spaid's interest in the partnership profit on the sale of the one-quarter Stock Exchange seat in 1929 was determined to be $7,548.57. There is no dispute as to the correctness of this amount or of its taxability as income to Spaid. It now appears, however, that the Commissioner in computing Spaid's total 1929 income tax assessed tax on this undisputed item at the 12½% rate applicable to capital gains on principal held more than two years. It is now conceded in the plaintiffs' reply brief that this item should have been taxed as ordinary income of Spaid, the rate for which on his income tax return for 1929 was 24% (4% normal tax and 20% surtax). It was...
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