Wilson v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 29 June 1929 |
| Docket Number | 28664-28666,Docket No. 12080-12082,35075. |
| Citation | 16 BTA 1280 |
| Parties | HENRY WILSON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. MRS. HENRY WILSON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. WINFRED T. WILSON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. F. A. WILSON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
W. W. Spalding, Esq., and Robert A. Littleton, Esq., for the petitioners.
Brice Toole, Esq., for the respondent.
The above proceedings were consolidated for hearing and decision. These cases involve determinations of the Commissioner as follows:
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| Deficiencies
|---------------------------------------------------
Year | Henry W. | Mrs. Henry | W. T | F. A
| Wilson | Wilson | Wilson | Wilson
---------------------------------|------------|------------|-------------|-----------
1920 ___________________________ | $10,590.79 | __________ | $2,223.76 | $2,310.26
1921 ___________________________ | 4,199.65 | __________ | 2,512.34 | 2,411.44
1922 ___________________________ | 4,587.03 | $750.21 | 3,353.27 | 3,112.99
1923 ___________________________ | 4,017.13 | 1,937.86 | 2,306.79 | 2,209.13
1924 ___________________________ | 615.41 | __________ | 476.80 | 453.00
| | | |
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The errors assigned and not waived in the cases of the several petitioners are as follows:
Henry Wilson. (1) Error on the part of the Commissioner in including in the petitioner's income for 1920 to 1924, inclusive, the whole amount of community income arising from sources within the State of Washington; (2) the charging by the Commissioner for the years 1920 and 1921 to the income of the petitioner certain items of interest derived from the separate property of his wife and taxable to her for such years; (3) failure to exclude from the taxable income for 1922 the sum of $382.81, representing interest received on United States certificates of indebtedness in 1921; (4) improper inclusion in the petitioner's income of certain items of interest for the years 1923 and 1924, arising from separate property of his wife and constituting part of her income; (5) disallowance of a deduction of $1,600 for each of the years 1922, 1923, and 1924, on account of depreciation sustained on the petitioner's automobile used for business purposes; (6) disallowance of a deduction for 1923 of an amount expended for necessary repairs and insurance on a business building.
Mrs. Henry Wilson. (1) Failure of the Commissioner to comply with the statute in mailing the 60-day notice and failure to hold that an assessment was barred by the statute of limitations because of improper mailing; (2) failure of the Commissioner to allow an adequate deduction for depreciation on an interest in a steamship; (3) failure of the Commissioner to allow the income assessed against Henry Wilson and returned by the petitioner to be excluded from the income of the petitioner for the years 1922 and 1923.
F. A. Wilson. (1) Failure to allow an adequate deduction on account of depreciation of certain steamships on the basis of their market value at the time acquired by gift; (2) failure to compute depreciation and depletion on the basis of value of the petitioner's interest in the depreciable and depletable assets of the partnership of Wilson Brothers & Co. as of January 2, 1918, the date upon which the petitioner's interest in such assets was acquired by gift; (3) failure of the Commissioner to compute the profit on the sale of certain timberlands in which the petitioner had an interest, by taking as a basis the valuation of the timberland as of January 2, 1918, the date when the petitioner's interest in such lands was acquired by gift; (4) error in including as income of the petitioner for the year 1920 a profit on the sale of a crane, interest in which was acquired January 2, 1918, by gift; (5) identical with error 3 assigned by the petitioner, Henry Wilson; (6) the inclusion of the sum of $1,448.44 in the petitioner's income for 1922 as an alleged profit derived from the sale of property in that year; (7) failure to allow an adequate deduction for depreciation sustained in the years 1922, 1923, and 1924 on certain steamships; (8) the inclusion of $1,522.64 in the petitioner's income for 1924, representing one-third of $3,567.93 added by the Commissioner to the income of Wilson Brothers & Co., arising out of a claim involving the steamer Svea; (9) failure to allow as deductions for the year 1924 the sum of $100 contributed to a corporation organized for educational purposes, and $250 paid for traveling expenses incurred in the petitioner's business.
W. T. Wilson. Errors 1 to 8 inclusive, are identical with the errors alleged in the case of F. A. Wilson.
The other errors assigned were waived.
FINDINGS OF FACT.
The petitioners Henry Wilson, Mrs. Henry Wilson, and Winfred T. Wilson are individuals residing at 1403 Madison Street, Oakland, Calif. The petitioner, F. A. Wilson, is an individual, with his principal place of business at 110 Market Street, San Francisco. During the years 1920 to 1924, Mrs. Henry Wilson owned certain securities and certificates of indebtedness of the United States from which she derived an income. The income received by Mrs. Wilson from this separate property and included in her return was as follows:
1920 __________________________________________ $27,310.50
1921 __________________________________________ 20,869.15
1922 __________________________________________ 17,928.48
1923 __________________________________________ 33,569.95
1924 __________________________________________ 16,391.00
The petitioners, Henry Wilson and his wife, were married on July 7, 1883. Subsequent to their marriage Henry Wilson became the owner of a one-half interest in Wilson Brothers & Co., a partnership doing business at Aberdeen, Wash. During the year 1919 Henry Wilson owned a 5/32 interest in such Washington partnership. Henry Wilson received the following amounts from the partnership during the years 1920 to 1924, inclusive:
1920 _________________________________________ $8,056.36
1921 _________________________________________ 4,140.27
1922 _________________________________________ 1,448.44
1923 _________________________________________ 1,081.91
1924 _________________________________________ 22.78
During the years 1920 to 1924 Henry Wilson owned shares of stock in the Hayes & Hayes Bank of Aberdeen, Wash., from which he received taxable income as follows:
1920 _________________________________________ $5,600
1921 _________________________________________ 1,400
1922 _________________________________________ 2,240
1923 _________________________________________ 1,680
1924 _________________________________________ 2,240
These shares of stock were acquired about 1909 or 1910.
During the taxable years in question in these proceedings, the petitioners Henry Wilson, Winfred T. Wilson, and F. A. Wilson were members of the partnership of Wilson Brothers & Co.
In the year 1921 there accrued to the partnership, which kept its books on an accrual basis, an item of $1,148.44 interest on certificates of indebtedness owned and held by it. This item was taken up on the books of the partnership as income for 1922, the year in which it was paid. The partners included in their individual returns for the year 1922 their distributive shares of this amount. In computing the deficiencies the respondent transferred this interest item from 1922 to 1921 but gave the petitioners no reduction in their individual returns for 1922 by reason of the transfer of this item.
During the year 1922 the steamer Svea, which was under the management of Wilson Brothers & Co., had a collision with the steamer Newport and had to be repaired. These repairs were made in the home port of the Svea and were completed about March 1, 1923. An item of $3,567.93, representing a commission of 5 per cent of the cost of the repairs to the Svea was set up on the books of the partnership at some time not shown by the evidence. The claimed commission was disallowed in August, 1925, by the United States Commissioner sitting in admiralty because of the fact that the repairs were made in the home port. The respondent added this item of $3,567.93 to the income of the partnership for the year 1924 and added one-third of the amount to the income of the petitioners W. T. and F. A. Wilson for 1924.
During the year 1922 Henry Wilson purchased a Packard automobile for $6,400 for use in connection with the partnership business. This machine was used in connection with the business and to some extent for personal purposes.
In sending the notice of deficiency to the petitioner Mrs. Henry Wilson for the year 1922, for which year a consent in writing had been filed extending the statutory period of limitations, the procedure was as follows: A letter was sent by registered mail on December 27, 1927, addressed to Mrs. Henry Wilson at 110 Market Street, Oakland, Calif. This petitioner never resided at such address. It was returned undelivered to the Commissioner on January 23, 1928, and then was remailed in the ordinary way without registration, enclosed in a letter of the Treasury Department dated January 23, 1928, addressed to the petitioner at 110 Market Street, San Francisco, Calif., the business address of Wilson Brothers & Co. The second letter, with its enclosures, was received by the...
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