Venetian Shortway, Inc. v. Comm'r of Internal Revenue

• Decision Date: 23 October 1944
• Docket Number: Docket No. 3432.
• Parties: VENETIAN SHORTWAY, INC., A FLORIDA CORPORATION, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

4 T.C. 244

VENETIAN SHORTWAY, INC., A FLORIDA CORPORATION, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 3432.

Tax Court of the United States.

Promulgated October 23, 1944.

Capital stock tax returns attempting to exercise election to designate additional declaration years, held, ineffectual to entitle petitioner to new declarations of value, due to delinquency in filing. Revenue Act of 1939, sec. 301. W. H. Mactye, C.P.A., for the petitioner.

Bernard D. Hathcock, Esq., for the respondent.

This proceeding involves deficiencies in declared value excess profits tax for fiscal years ended April 30, 1940, and 1941, in the respective amounts of $442.56 and $1,338.92, and a 25 percent delinquency penalty in the amount of $445.37. The only question is the proper value to be attributed to petitioner's capital stock for the purpose of computing its declared value excess profits taxes.

FINDINGS OF FACT.

Petitioner is a corporation, with principal office in Miami, Florida.

The returns for the periods here involved were filed with the collector at Jacksonville, Florida.

Petitioner filed three capital stock tax returns for the respective capital stock years ended June 30, 1938, June 30, 1939, and June 30, 1940, on December 23, 1942, and paid the tax, delinquency penalty, and interest shown thereon.

In the three returns the declared value of petitioner's capital stock and in the last two the adjusted value appear as follows:

+--+
                ¦¦¦¦
                +--+
                

Year ended—   Declared Adjusted
                              value    value
                June 30, 1938 $113,000
                June 30, 1939 186,000  $124,234.00
                June 30, 1940 256,000  142,776.13
                

In determining the deficiencies now contested respondent included the following statement in the deficiency notice:

It is held that the adjusted ;declared value of your capital stock for the capital stock tax year ended June 30, 1939 constitutes the basis for the allowable credit in computing your declared value excess-profits tax for the taxable year ended April 30, 1940 and that the adjusted declared value of your capital stock for the capital stock tax year ended June 30, 1940 constitutes the basis for the allowable credit in computing your declared value excess-profits tax for the taxable year ended April 30, 1941.

OPINION.

OPPER, Judge:

The controversy involves the effect of capital stock tax returns filed by petitioner subsequent by two years or more to the date¹ when they were due according to the statutory plan.² Petitioner's declared value excess profits tax, the amount of which is now in issue, depends for its computation upon the valuation to be placed upon the capital stock.³ This in turn is designed to be the figure selected by the taxpayer itself for the first capital stock tax year which, as to corporations like petitioner which were in existence at the time, is found to be the year ended June 30, 1938.⁴ Originally the value established for that year was binding for the two succeeding years, subject to specified adjustments not here material.⁵ Subsequently, however, leave was given to elect new declarations of value for the capital stock tax years 1939 and 1940, subject to compliance with certain preliminary and specific conditions.⁶ Petitioner claims to be entitled in the computation of its declared value excess profits tax to the benefit of such new declarations for those two years. The question is whether it has complied with the conditions necessary to avail itself of that privilege.

In Haggar Co. v. Helvering, 308 U.S. 389, the taxpayer corporation had filed a capital stock tax return embodying an elected declared value for its capital stock as authorized by the capital stock tax provisions of the revenue act. The value declared in the ‘first‘ return could not thereafter be amended. Subsequently the taxpayer attempted to file an amended return containing a different declared value, a position which the respondent refused to accept. Pointing out that the second return was filed within the time permitted for the filing of the original return, and hence that it accomplished nothing more than the taxpayer could have legally effected by withholding its original return, the Supreme Court held that the statute was susceptible of the construction that by ‘first return‘ was meant the return for the first year and that the timely amended declaration thus escaped the prohibition of the statute. That the decision was limited to a timely filing appears conclusively from the subsequent decision in Riley Investment Co. v. Commissioner, 311 U.S. 55.

The question here is very different. Not only does the present statute incorporate expressly the result of the Haggar case to permit declarations to be effective which are filed within the statutory filing period or any authorized extension thereof,⁷ but here what petitioner seeks to do is not to amend a declaration within the statutory period, but by means of a concededly delinquent filing to exercise an election the expression of which the statute unmistakably confines to a timely return.

We are unable to concur in the suggestion that there is any room for construction of the statutory mandate. ‘Petitioner is seeking * * * to adopt a new method of computation * * * . That opportunity was afforded as a matter of legislative grace; the election had to be made in the manner and in the time prescribed by Congress. The offer was liberal. But the method of its acceptance was restricted. * * * To extend the time beyond the limits prescribed in the Act is a legislative not a judicial function.‘ Riley Investment Co. v. Commissioner, supra. While the manner of exercising the election now in controversy may have accorded with the...