State ex rel. Crucible Steel Casting Co. v. Wis. Tax Comm'n

CourtUnited States State Supreme Court of Wisconsin
Writing for the CourtJONES
Citation185 Wis. 525,201 N.W. 764
Decision Date13 January 1925
PartiesSTATE EX REL. CRUCIBLE STEEL CASTING COMPANY v. WISCONSIN TAX COMMISSION.

185 Wis. 525
201 N.W. 764

STATE EX REL. CRUCIBLE STEEL CASTING COMPANY
v.
WISCONSIN TAX COMMISSION.

Supreme Court of Wisconsin.

Jan. 13, 1925.


Appeal from Circuit Court, Dane County; E. Ray Stevens, Judge.

Certiorari by the State of Wisconsin, on the relation of the Crucible Steel Casting Company, against the Wisconsin Tax Commission. Judgment for defendant, and relator appeals. Affirmed.

[201 N.W. 764]

Edgar L. Wood, of Milwaukee, for appellant.

H. L. Ekern, Atty. Gen., and Franklin E. Bump, Asst. Atty. Gen., for respondent.


JONES, J.

This is an appeal from the judgment of the circuit court for Dane county in proceedings upon a writ of certiorari issued from that court to the Wisconsin tax commission. The defendant made return to the writ, and to this return a demurrer was filed, which was overruled.

The petition sets forth that the relator duly filed its return of income for the year 1918, subject to income taxation in Wisconsin, stating the total gross income, expenses, and deductions, and the net taxable income in the amount of $64,470.41; that the tax commission gave notice of an additional assessment of income in the amount of $40,127 for 1918; that this additional assessment of income was caused by the tax commission disallowing certain deductions claimed in the return, thereby making additional net income for the year; that the principal addition is an item of $80,000, set up by the corporation on its books in 1918, as a reserve for accrued and accruing commissions and expenses; that subsequently the amount of the liability was determined by a judgment of the Supreme Court, and paid by the taxpayer on November 4, 1920; that in said judgment it was determined that the commissions were for services performed for the relator, and due in 1918, in the sum of $24,077.46; that an appeal had been denied, and the assessment had been affirmed by the tax commission; that notices had been given the relator of an additional assessment to that of Jan. 4, 1923, for interest at the rate of 10 per centum per annum upon all back taxes, under the authority of section 7, c. 310, of the Laws of 1923; that this assessment had also been affirmed by the commission; that the defendant was about to enter the additional assessments upon the corporate tax roll, and certify the same to the county clerk of Milwaukee county. The return of the tax commission included relator's return of income for the year 1918, the auditor's report, and various documents and instruments relating to the issues involved.

[1] The claim for deduction arose out of a contract with one Smith, by which the plaintiff had agreed to pay Smith certain commissions for services rendered. The company paid Smith commissions for a period, but afterward refused to pay such commissions for the year 1918. It was the claim of the plaintiff that Smith had forfeited his right to the commissions by a violation of his contract. Suit was brought by Smith against the company in August, 1917, to establish

[201 N.W. 765]

the validity of the contract, and for an accounting to the date of the commencement of the action. The suit was tried in the circuit court for Milwaukee county in February, 1919, and resulted in judgment for damages for commissions earned in 1916, 1917, and 1918, the date of the commencement of the action. The relator appealed to this court, and a decision was rendered in September, 1920, modifying the judgment, and awarding an accounting for commissions to the date of the trial of the case in the circuit court. An accounting was had and resulted in the finding that Smith was entitled to commissions earned in the year 1918 in the sum of $24,077.46. This judgment was paid on November 4, 1920. The increased amount of the tax, including income tax, soldiers' educational surtax, and soldiers' bonus tax, for the year 1918, was $4,255.67. Subsequently there was added an additional assessment for interest.

In the litigation between the plaintiff and Smith there were involved claims for two years other than 1918, and commissions for those years were included in the judgment finally allowed Smith. In the briefs there is some discussion respecting these other amounts, but, as the appellant's counsel state in their brief that the legality of additions of taxable income for those years is not contested, we shall confine the discussion in relation to deductions to the action of the tax commission in disallowing deduction for the year 1918. After reciting the proceedings before it, and the history of the litigation between Smith and the corporation, the tax commission said, in its decision:

“In view of all the circumstances, it appears that the company did not recognize that Smith had any legal claim against it. Consequently, it could not have properly deducted any amount of the commissions it was subsequently compelled to pay during the years in which the castings were manufactured. Smith's claim was entirely contingent upon winning his suit. The Wisconsin Income Tax Law provides that contingent losses and liabilities are not deductible. The commission has consistently held in similar cases that contingent losses and liabilities cannot be deducted until based on a complete and closed transaction and can see no reason why any exception should be made in this case.”

For substantially the same reasons the trial court sustained the decision of the commission. Counsel for the appellant rely on several sections of the statutes for their claim that the deduction made in the income tax return of the plaintiff should have been allowed. Section 1087m-3 (b), Stats. 1917, now section 71.03 (2), reads:

“Other ordinary and necessary expenses and cash bonuses to employees, actually paid within the year out of the income in the maintenance and operation of its business and property. * * *”

Section 1087m-1, Stats. 1917, now section 71.01, reads in part as follows:

“There shall be assessed, levied, collected and paid a tax upon incomes * * * provided, that firms * * * which customarily close their annual accounts on a date other than December 31, or which customarily estimate their income or profits on a basis other than of actual cash receipts and disbursements, may, with the consent and approval of the tax commission, return for assessment and taxation the income or profits earned during the business year for which the accounts of such person are customarily made up.”

Section 71.02 (3) (b) of the Wisconsin Statutes of 1923 reads as follows:

“The terms ‘paid’ or ‘actually paid,’ as used in this chapter, are to be construed in each instance in the light of the method used in computing taxable income whether on the accrual or receipt basis; provided, that the deduction for federal income and excess profits taxes shall be confined to cash payments made within the year covered by the income tax return, and that reserves for contingent losses or liabilities shall not be...

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14 practice notes
  • Colgate v. Harvey
    • United States
    • Vermont United States State Supreme Court of Vermont
    • November 14, 1934
    ...expenditures from business income. In re Opinion of the Justices, 85 N. H. 570, 154 A. 632, 633; State v. Wisconsin Tax Commission, 185 Wis. 525, 201 N. W. 764, 766. It may provide for a graduated progressive rate. Bacon v. Ransom, 331 Mo. 985, 56 S.W. (2d) 786. It may allow a reasonable pe......
  • Bilda v. Milwaukee County, No. 2005AP52.
    • United States
    • Court of Appeals of Wisconsin
    • July 20, 2006
    ...`object and purpose' of the requirement has been accomplished." (citing State ex rel. Crucible Steel Casting Co. v. Wisconsin Tax Comm'n, 185 Wis. 525, 534-35, 201 N.W. 764 ¶ 15 Accordingly, we conclude that the Commission's minutes, Dobbert's memo, and Skelly's letter constitute a "written......
  • In re Integration of Bar
    • United States
    • Wisconsin Supreme Court
    • November 9, 1943
    ...177 N.W. 910;State v. P. Lorillard Co., 1923, 181 Wis. 347, 193 N.W. 613;State ex rel. Crucible S. C. Co. v. Wisconsin Tax Comm., 1925, 185 Wis. 525, 201 N.W. 764;B. F. Sturtevant Co. v. Industrial Comm., 1925, 186 Wis. 10, 202 N.W. 324;Loomis v. Callahan, 1928, 196 Wis. 518, 220 N.W. 816;S......
  • State ex rel. General Motors Corp., AC Electronics Division v. City of Oak Creek, No. 209
    • United States
    • United States State Supreme Court of Wisconsin
    • January 5, 1971
    ...and to fix responsibility on each member voting. * * *' State ex rel. Crucible[49 Wis.2d 323] S.C. Co. v. Wisconsin Tax Comm. (1925), 185 Wis. 525, 534, 201 N.W. 764, Appellant next argues that the bill was not approved by the governor within the time allowed by art. V, sec. 10 of the const......
  • Request a trial to view additional results
14 cases
  • Colgate v. Harvey
    • United States
    • Vermont United States State Supreme Court of Vermont
    • November 14, 1934
    ...expenditures from business income. In re Opinion of the Justices, 85 N. H. 570, 154 A. 632, 633; State v. Wisconsin Tax Commission, 185 Wis. 525, 201 N. W. 764, 766. It may provide for a graduated progressive rate. Bacon v. Ransom, 331 Mo. 985, 56 S.W. (2d) 786. It may allow a reasonable pe......
  • Bilda v. Milwaukee County, No. 2005AP52.
    • United States
    • Court of Appeals of Wisconsin
    • July 20, 2006
    ...`object and purpose' of the requirement has been accomplished." (citing State ex rel. Crucible Steel Casting Co. v. Wisconsin Tax Comm'n, 185 Wis. 525, 534-35, 201 N.W. 764 ¶ 15 Accordingly, we conclude that the Commission's minutes, Dobbert's memo, and Skelly's letter constitute a "written......
  • In re Integration of Bar
    • United States
    • Wisconsin Supreme Court
    • November 9, 1943
    ...177 N.W. 910;State v. P. Lorillard Co., 1923, 181 Wis. 347, 193 N.W. 613;State ex rel. Crucible S. C. Co. v. Wisconsin Tax Comm., 1925, 185 Wis. 525, 201 N.W. 764;B. F. Sturtevant Co. v. Industrial Comm., 1925, 186 Wis. 10, 202 N.W. 324;Loomis v. Callahan, 1928, 196 Wis. 518, 220 N.W. 816;S......
  • State ex rel. General Motors Corp., AC Electronics Division v. City of Oak Creek, No. 209
    • United States
    • United States State Supreme Court of Wisconsin
    • January 5, 1971
    ...and to fix responsibility on each member voting. * * *' State ex rel. Crucible[49 Wis.2d 323] S.C. Co. v. Wisconsin Tax Comm. (1925), 185 Wis. 525, 534, 201 N.W. 764, Appellant next argues that the bill was not approved by the governor within the time allowed by art. V, sec. 10 of the const......
  • Request a trial to view additional results

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