Phillips v. Commissioner

ANNIE G. PHILLIPS, ARTHUR L. PHILLIPOS, SEYMOUR PHILLIPS, AND ABRAHAM S. PHILLIPS, EXECUTORS, ESTATE OF I. L. PHILLIPS, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Phillips v. Commissioner

Docket No. 19286.

United States Board of Tax Appeals

15 B.T.A. 1218; 1929 BTA LEXIS 2705;

April 2, 1929, Promulgated

---

">*2705 Under section 280 of the Revenue Act of 1926 one of eleven transferees of the assets of the corporation upon liquidation who received property of a greater value than the deficiency in income and profits tax due by the corporation, is liable for payment of the entire deficiency.

Herman Goldman, Esq., for the petitioners.

J. E. Mather, Esq., for the respondent.

---

LITTLETON

">*1218 The Commissioner determined and assessed deficiencies in income and profits tax against the Coombe Garment Co. of $277.75 for 1918 and $9,124.68 for 1919, and on June 16, 1926, mailed a notice to I. L. Phillips, a transferee, proposing therein to assess against and collect from him the amount of additional unpaid taxes for the years in question assessed against the Coombe Garment Co.

The facts are stipulated.

FINDINGS OF FACT.

The executors are residents of New York, N.Y. The Coombe Garment Co., Inc., and the Coombe Garment Co. are one and the same, a Pennsylvania corporation, which had its principal place of business in Philadelphia, Pa.The corporation filed its corporation income and profits-tax return for the calendar year 1918 on June 16, 1919, and its">*2706 return for the year 1919 on March 6, 1920. At the time of complete liquidation, September 27, 1919, the corporation had issued and outstanding capital stock of $50,000, represented by 500 shares of a par value of $100 each. The stockholders, the number of shares owned by each and the percentage of capital stock owned by each to the total capital stock outstanding of the Coombe Garment Co., and the amount received by each stockholder as a liquidating dividend, were as follows:

Name of stockholder	Percentage of stockholdings	Amount received in liquidation
B. C. Guldin	180/0003/900	$13,711.69
I. L. Phillips	225/0003/900	17,139.61
F. J. Noonan	47/3690/900	3,608.38
C. S. Parmley	47/3690/900	3,608.38
C. H. Parnell	18/0003/900	1,371.19
Effie E. Scott	78/1600/900	9,953.90
Max Phillips	118/4182/900	9,020.61
I. A. Coombe	23/6823/900	$1,804.02
W. H. Coombe	45/0002/900	3,427.94
R. R. Updegrave	81/0002/900	6,170.27
Roy Updegrave	36/0002/900	2,742.36
		68,558.35

">*1219 The amount of $68,558.35 shown above as paid in liquidating dividends was the total assets of the Coombe Garment Co. and was paid by said corporation to its stockholders">*2707 between July 25, 1919, and September 27, 1919.

The Commissioner assessed against the corporation an additional tax of $277.75 for 1918 in February, 1925, and an additional tax of $9,124.68 for 1919 in December, 1924.

Of the additional tax assessed against the corporation for 1918, $96.07 has been paid, leaving $9,306.36 unpaid tax due upon the income of the corporation for the years involved. No suit or proceedings for collection of said additional assessments against the Coombe Garment Co. has been begun, made, or instituted.

June 16, 1926, the Commissioner mailed to I. L. Phillips, at 1225 Broadway, New York, N.Y., a notice of his determination of petitioner's liability for the unpaid tax of the corporation, as follows:

As provided in Section 280 of the Revenue Act of 1926, there is proposed for assessment against you, as a transferee of the assets of the Coombe Garment Company, dissolved, 1046 South 58th Street, Philadelphia, Pennsylvania, the sum of $9,306.36, representing unpaid income and profits tax assessed against that company for the years 1918 and 1919, as detailed in the attached statement.

The Commissioner is proposing by the aforesaid notice to assess and">*2708 collect from I. L. Phillips the entire additional tax of the Coombe Garment Co. and has not sent to any other stockholder, as transferee of the assets of the Coombe Garment Co., a notice on account of the unpaid deficiencies for the years 1918 and 1919 of the Coombe Garment Co.

February 9, 1924, the Coombe Garment Co. and the Commissioner consented in writing to the extension of the statutory period of limitation for the determination, assessment and collection of the amount of income and excess-profits or war-profits taxes due under any return made by or on behalf of said Coombe Garment Co. for the year 1918, for a period of one year.

I. L. Phillips has not entered into any agreement with the Commissioner with regard to the time within which any amounts on account of the taxes of the corporation for 1918 and 1919 may be assessed and/or collected against him.

">*1220 There is no suit or proceeding pending against any of the other stockholders of the Coombe Garment Co. for collection of all or any part of the additional taxes of the Coombe Garment Co. for the years 1918 and 1919 above referred to.

OPINION.

LITTLETON: The executors contend (1) that section 280 of">*2709 the Revenue Act of 1926 is unconstitutional, and (2) if the section is constitutional, the estate of I. L. Phillips is liable for only its pro rata portion of the unpaid tax of the corporation.

The first contention is disposed of by the opinion of the Board in , and the second claim advanced is governed by the opinion of the Board in , in which we held that any one of several transferees of the assets of the corporation is liable for the unpaid tax of the corporation to the extent of the amount received upon liquidation. Since I. L. Phillips received property of a greater value than the amount of the tax due by the Coombe Garment Co., the taxpayer, the Commissioner's determination is approved.

Judgment will be entered for the respondent.