Martin Hotel Co. v. Commissioner

MARTIN HOTEL COMPANY AND AFFILIATED CORPORATIONS, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Martin Hotel Co. v. Commissioner

Docket No. 16275.

United States Board of Tax Appeals

24 B.T.A. 899; 1931 BTA LEXIS 1576;

November 24, 1931, Promulgated

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1. Waivers adduced in evidence by the respondent prove that petitioners' tax liability for 1921 has never been barred by the statute of limitations.

2. The amount of deficiencies for a prior year barred by the statute of limitations should be included in the computation of invested capital for the taxable year.

R. M. O'Hara, Esq., for the petitioners.

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

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LANSDON

The respondent has asserted deficiencies for the year 1920 against a group of affiliated corporations, viz., the Martin Hotel Company of Sioux City, Iowa, and the Sioux Falls Hotel Company and the Minnehaha Hotel Company of South Dakota, in the respective amounts of $8,375.28; $5,899.49; and $8,819.15. Notice of such deficiencies was mailed to the Martin Hotel Company as the parent corporation. The only issues presented to the Board are (1) Whether the statute of limitations had run against the taxability of the several members of the affiliated group at the date the deficiency letter was mailed; and (2) whether the respondent erred in reducing the invested capital of the petitioners by the amount of certain taxes asserted for previous years which the Board held had been extinguished by the statute of limitations.

FINDINGS OF FACT.

The petitioner is a corporation, with its principal office at Omaha, Nebr. Its original income and profits-tax return for the year 1920 was filed in the office of the collector of internal revenue at Dubuque, Iowa, on March 15, 1921. The original income and profits-tax returns of the Sioux Falls Hotel Company and the Minnehaha Hotel Company were filed in the office of the collector of internal revenue for the district of South Dakota, on March 15, 1931.

Upon audit of the corporate returns filed as above set out, the Commissioner held that these corporations were affiliated, determined the deficiencies here in controversy, and on March 23, 1926, mailed a notice of such deficiencies to the president of the companies.

On February 1, 1926, the president of each of the affiliated corporations and the Commissioner of Internal Revenue executed income and profits-tax waivers for the year 1920, identical except for the name of the company, as follows:

INCOME AND PROFITS TAX WAIVER

FOR TAXABLE YEARS ENDED PRIOR TO JANUARY 1, 1922.

February 1, 1926.

In pursuance of the provisions of existing Internal Revenue Laws Sioux Falls Hotel Company, a taxpayer of Sioux Falls, South Dakota, and the Commissioner of Internal Revenue hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year 1920 under existing revenue acts, or under prior revenue acts.

This waiver of the time for making any assessments as aforesaid shall remain in effect until December 31, 1926, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.

(Signed) SIOUX FALLS HOTEL CO.,

By E. C. EPPLEY, PT.

Taxpayer.

By D. H. BLAIB

By D. H. BLAIR

If this waiver is executed on behalf of a corporation, it must be signed by such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which, the seal, if any, of the corporation must be affixed.

In computing the invested capital of the affiliated group for the year 1920, the Commissioner excluded therefrom the amounts of $14,518.40; $11,544.22; $2,230.09; and $11,856.21, less certain abatements which represent deficiencies asserted against the affiliated group for the year 1919. In its report promulgated January 15, 1920, in this same proceeding, the Board held that the deficiencies asserted for 1919 were barred by the statute of limitations and restored the same to the general calendar for a redetermination of the deficiencies asserted for 1920.

OPINION.

LANSDON: The waivers adduced in evidence by the respondent prove that the time for the assessment of additional taxes against each of the three members of the affiliated group here involved was extended as provided by law to December 31, 1926. The deficiency notice was mailed on March 23, 1926, which was within the time limit as extended by such waivers. The asserted deficiencies have not been barred by the statute of limitations.

In its report in this proceeding, at page 826, 18 B.T.A., this Board held that the deficiencies asserted against the affiliated group for the year 1919, in the amount of $40,149, had been extinguished by the statute of limitations. The Commissioner erroneously excluded the amount of such deficiencies from the petitioners' invested capital for 1920. ; ; ; .

Decision will be entered under Rule 50.