Sawyer Milling Co. v. Commissioner , 17 B.T.A. 160 ( 1929 )

SAWYER MILLING CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

E. B. SAWYER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

N. B. SAWYER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

N. B. SAWYER, EXECUTOR, ESTATE OF H. A. SAWYER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Sawyer Milling Co. v. Commissioner

Docket Nos. 20924, 24485, 24987, 24988.

United States Board of Tax Appeals

17 B.T.A. 160; 1929 BTA LEXIS 2346;

August 27, 1929, Promulgated

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1. The parties having stipulated or proved all the facts necessary to determine the gain, if any, which the petitioner in Docket No. 20924 realized from the collection of the proceeds of certain fire insurance policies, such gain, and any additional tax liability resulting therefrom should be recomputed under Rule 50, in conformity with the stipulation and findings of fact.

2. Petitioners in Docket Nos. 24485, 24987, and 24988 having admitted liability as transferees for the unpaid taxes due by petitioner in Docket No. 20924, are each subject to assessment therefor, not in excess of the value of the property received.

H. L. Washington, Esq., and Ray G. Ransom, C.P.A., for the petitioners.

Arthur H. Murray, Esq., for the respondent.

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LANSDON

In Docket No. 20924 the respondent asserts a deficiency in income tax for the year 1922 against the Sawyer Milling Co. in the amount of $4,675.76. In Docket Nos. 24495, 24987, and 24988, he asserts liability under section 280 of the Revenue Act of 1926 against each of the petitioners therein in the amount of $4,675.76. The only issue involved in Docket No. 20924 is whether the Commissioner erred in his determination that the petitioner realized profit in 1922 from the receipt of $69,000 paid to it by five insurance companies on account of the practically total destruction of its property by fire in that year.

FINDINGS OF FACT.

The parties filed the following stipulation of facts, which the Board accepts:

(a) That the petitioner sustained a net loss from operations during the calendar year 1921 in the amount of $16,249.84, which amount is allowable as a deduction from the gross income of the year 1922.

(b) That, exclusive of any gain or loss on account of the destruction of its plant by fire, the petitioner sustained a net loss from operations during the calendar year 1922 in the amount of $20,755.60.

(c) That the petitioner received during the year 1922 the sum of $69,000 proceeds from insurance on mill buildings and machinery destroyed by fire within the year. That the salvage value of the property was $2,345.12.

(d) That the cost of the mill building to the petitioner on September 12, 1905, was $7,000.

(e) That the following additions to mill buildings were made by the petitioner:

Year	Amount
1911	$2,425.00
1912	151.62
1914	5,625.40
1915	$62.20
1916	500.00
1917	2,998.23
1918	$95.11
1919	181.72
1921	2,494.86

(f) That the cost of the mill machinery to the petitioner at acquisition on September 12, 1905, was $22,000.

(g) That the petitioner made the following additions to mill machinery:

Year	Amount
1911	$350.36
1912	175.00
1914	28,874.60
1915	75.00
1916	$20.00
1917	261.32
1918	99.90
1919	512.50
1920	$569.54
1921	160.40
1922	748.30

In Docket Nos. 24485, 24987, and 24988, the parties in each proceeding filed the following stipulation, which is accepted by the Board:

It is stipulated and agreed between the respective parties hereto, by their Counsel, that petitioner is a transferee of the assets of the Sawyer Milling Company of Hutchinson, Kansas, and is liable for any deficiency in tax in respect to the calendar year 1922, which may be determined by the Board of Tax Appeals in connection with the appeal of the Sawyer Milling Company, Docket No. 20924.

The buildings and machinery of the Sawyer Milling Co. had a useful life of 40 years and 20 years, respectively.

OPINION.

LANSDON: The parties herein have stipulated that the Sawyer Milling Co. acquired certain tangible depreciable property at certain dates and costs; that such property was almost totally destroyed by fire in 1922; that the salvage value of the undestroyed property was $2,345.12; that the Sawyer Milling Co. received insurance money on account of such destruction in the amount of $69,000; that such company sustained a net operating loss in 1921 in the amount of $16,249.84, which is allowable as a deduction from its gross income for 1922; that exclusive of the gain or loss resulting from the receipt of $69,000 from certain insurance companies in 1922 it sustained a net operating loss in such year in the amount of $20,755.60; and that each of the petitioners in Docket Nos. 24485, 24987, and 24988 is liable as the transferee of the assets of the Sawyer Milling Co. for any additional tax due the Government by that company for the year 1922. It remains, therefore, only for the Board to determine the gain, if any, realized by the Sawyer Milling Co. from the receipt of the proceeds of the insurance policies which it collected in the taxable year, and this question is narrowed by the stipulation to a mere computation of the accrued depreciation sustained upon the tangible property of such company prior to the destruction thereof by fire. All the data for such computation, except the useful life of the property in question, is stipulated in express terms. We have found from the evidence that the buildings and machinery in question had a useful life of 40 years and 20 years, respectively. The income of the Sawyer Milling Co. for 1922 and the additional tax due should be recomputed in conformity with the stipulation and our findings of the useful life of the tangible property destroyed by fire.

Each of the petitioners in Docket Nos. 24485, 24987, and 24988 has by stipulation admitted his liability for any tax found to be due the Government on account of the income of the Sawyer Milling Co. for the year 1922. Any tax found upon recomputation to be due by such company for the year 1922 may be assessed against each of such petitioners, but not in an amount greater than the value of the assets received by transfer from the taxpayer. .

Decision will be entered under Rule 50.