THE CONTINENTAL INSURANCE COMPANY v. Commissioner of Internal Revenue

• Decision Date: 08 September 1939
• Docket Number: 92571,92573,92572,Docket No. 92569,92574.,92570
• Parties: THE CONTINENTAL INSURANCE COMPANY, PETITIONER, ET AL., v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

40 B.T.A. 540 (1939)

THE CONTINENTAL INSURANCE COMPANY, PETITIONER, ET AL.,¹ v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket Nos. 92569, 92570, 92571, 92572, 92573, 92574.

Board of Tax Appeals.

Promulgated September 8, 1939.

Pressly R. Baldridge, Esq., for the petitioners.

B. M. Brodsky, Esq., for the respondent.

OPINION.

MURDOCK:

The Commissioner determined the following deficiencies in income tax for 1934:

                --------------------------------------------------------------------------------------------
                                           Petitioner                      | Docket No. |  Year  |  Amount
                -----------------------------------------------------------|------------|--------|----------
                Continental Insurance Co __________________________________|     92569  |  1934  | $5,765.35
                First American Fire Insurance Co __________________________|     92570  |  1934  |    446.22
                Fidelity-Phenix Fire Insurance Co. of New York ____________|     92571  |  1934  |  3,084.99
                Niagara Fire Insurance Co _________________________________|     92572  |  1934  |  1,329.65
                Fidelity and Casualty Co. of New York _____________________|     92573  |  1935  |  2,283.79
                Maryland Insurance Co _____________________________________|     92574  |  1935  |    516.54
                --------------------------------------------------------------------------------------------
                

The issue presented is whether the petitioners are entitled to credits for taxes paid to the Dominion of Canada. The facts in each case have been stipulated and are hereby found as stipulated.

Each case has in it exactly the same question that was decided for the taxpayer in Queen Insurance Co. of America, 40 B. T. A. 484, and following that decision we hold that the total amount due under the Canadian Income War Tax Act, including the amount credited thereon but paid originally as premium tax, is a proper credit under section 131 (a) (1).

That disposes of all of the cases except the first and the last, in which payments of premium tax under the Canadian Special War Revenue Act exceeded the amount due under the Canadian Income War Tax Act. The Continental Insurance Co. paid $66.84 more as premium tax under the Canadian Special War Revenue Act than it owed as income tax under the Canadian Income War Tax Act. A similar excess in the case of the Maryland Insurance Co. was $646.94. These two proceedings present, on account of these excesses, the question of whether the Canadian Special War Revenue Act, in imposing a tax upon annual premiums on Canadian business in the case of certain insurance companies, imposed an income tax. This question was not decided in the Queen Insurance Co. case and was conceded by the Government in favor of the taxpayer in the case of United States Fidelity & Guaranty Co., 5 B. T. A. 23. But here it must be decided.

The tax is tested by our standards of an income tax. Biddle v. Commissioner, 302 U. S. 573. Income, as defined by our courts and statutes, is now generally understood to mean something quite different from gross...