Kent v. Commissioner ( 1927 )

ARCHER L. KENT, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Kent v. Commissioner

Docket No. 10821.

United States Board of Tax Appeals

6 B.T.A. 614; 1927 BTA LEXIS 3459;

March 26, 1927, Promulgated

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">*3459 Archer L. Kent pro se.

W. Frank Gibbs, Esq., for the respondent.

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GREEN

">*614 This is an appeal from the determination of a deficiency in income tax for 1923 in the amount of $382.36. The question involved is whether or not dividends declared by a corporation in which the petitioner held stock were taxable to him in the year 1923 or the year 1924.

FINDINGS OF FACT.

The petitioner is an individual residing at 955 Central Avenue, Pawtucket, R.I. During the year 1923 he was a stockholder in the Narragansett Milling Co., of East Providence, R.I., which during that year declared dividends in the amount of $17,605.04 on the stock owned by him. Of this amount $7,464.79 was payable on December 31, 1923, and was unqualifiedly made subject to the petitioner's demand on that date. This dividend was "mailed" to the petitioner by the Narragansett Milling Co. on December 31, 1923, but was not actually received by him until some time during January, 1924. He reported as income on his return for 1923 dividends in the amount of $10,140.25, representing dividends paid prior to December 31, 1923, but failed to report the dividend of $7,464.79. The Commissioner">*3460 in determining the deficiency here involved has increased income by that amount. The petitioner's books are kept on a cash receipts and disbursements basis.

">*615 OPINION.

GREEN: The only question involved in this appeal is whether or not the dividend declared in 1923 payable on December 31 of that year, mailed to the stockholder on that date but received by him in 1924, should be included in the stockholder's income for 1923 or the succeeding year, the stockholder's books being kept on the cash receipts and disbursements basis. The parties hereto expressly stipulated that "of the total dividends declared, the amount of $7,464.79 was payable on December 31, 1923, and was unqualifiedly subject to the taxpayer's demand on that date."

Section 201(e) of the Revenue Act of 1921 reads as follows:

For the purposes of this Act, a taxable distribution made by a corporation to its shareholders or members shall be included in the gross income of the distributees as of the date when the cash or other property is unqualifiedly made subject to their demands.

Since, then, the dividend was stipulated to be unqualifiedly subject to the demand of the petitioner, he is clearly within">*3461 the provision of the section of the statute quoted and the amount of such dividend should be included in the petitioner's gross income for the year 1923.

Judgment will be entered for the Commissioner.