Jones v. Commissioner

LILLIE M. JONES, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

FRANK H. JONES, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

WALTER E. JONES, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Jones v. Commissioner

Docket Nos. 28613-28615.

United States Board of Tax Appeals

21 B.T.A. 275 ; 1930 BTA LEXIS 1881 ;

November 11, 1930 , Promulgated

*1881 1. Henry Cappellini et al., 14 B.T.A. 1269 , followed.

2. Proposed assessment of amount of deficiency in tax against transferee petitioners is barred by the statute of limitations.

D. Webster Egan, Esq., for the petitioners.

J. E. Mather, Esq., and R. W. Wilson, Esq., for the respondent.

SEAWELL

*275 The Commissioner assessed against the estate of Elmer E. Jones, deceased, a deficiency in income and profits tax amounting to $38,761.19 for the year 1920, which is outstanding and unpaid, and he is now proposing to assess such deficiency as a liability for said year against the petitioners as transferees of said estate, within the meaning of section 280 of the Revenue Act of 1926.

The petitions and answers raise the following issues: (1) The constitutionality of said section 280; (2) whether the basis for determining the gain or loss on the sale of certain real property of the Elmer E. Jones estate acquired by him prior to March 1, 1913, is the value of the same at the date of his death or the March 1, 1913, value; and (3) whether the proposed deficiency assessment is barred by the statute of limitations.

The cases *1882 are consolidated for hearing and decision and are submitted on the pleadings, testimony of two witnesses, exhibits, and stipulation.

FINDINGS OF FACT.

All of the petitioners are residents of the State of California.

Elmer E. Jones died November 20, 1918, the owner of certain real estate acquired by him prior to March 1, 1913, the cost of which to him, if any, is not shown in the evidence.

During 1909 to 1911 he entered into certain agreements for the leasing of certain properties, with option to purchase, to the Standard Oil Co., which purchased the property of the Elmer E. Jones estate on or about August 1, 1920, for the sum of $392,000.

In the final distribution of said estate the petitioner Lillie M. Jones received property and assets of said estate exceeding in value the *276 tax, with penalty and interest, involved in these proceedings. The petitioners, Frank H. Jones and Walter E. Jones each received, in the final distribution of said estate, property and assets of the value of $32,291.13.

All the petitioners are transferees of the estate of said Elmer E. Jones, deceased, within the meaning of section 280 of the Revenue Act of 1926.

It is agreed between *1883 counsel representing petitioners and respondent that if the basis for determining gain or loss on the sale of said oil properties sold by said estate on or about August 1, 1920, is the value at the date of the death of said Elmer E. Jones, then the correct deficiency due and unpaid from the said estate for additional income and profits taxes for the year 1920 is $28,459.15, with interest as provided by law. It is also agreed that if the basis for determining gain or loss on the sale of said properties so sold by said estate is as of March 1, 1913, then and in that event there is no deficiency.

The income and profits-tax return of said estate required by law for the year 1920 was filed with the collector of internal revenue at Los Angeles, Calif., on or before March 15, 1921.

The deficiency notice was mailed to each of the petitioners on March 22, 1927.

Lillie M. Jones, as administratrix of the estate of Elmer E. Jones deceased, administered said estate and was discharged as such administratrix by order of the Judge of the Superior Court of the County of Kern, State of California, in December, 1922.

A paper writing signed on August 20, 1925, by the petitioner, Mrs. Lillie *1884 M. Jones, reads as follows:

INCOME AND PROFITS TAX WAIVER

FOR TAXABLE YEARS ENDED PRIOR TO JANUARY 1, 1922.

AUGUST 20, 1925.

In pursuance of the provisions of existing Internal Revenue Laws E. E. Jones, Estate of E. E. Jones, Lillie M. Jones, Administratrix, a taxpayer of Bakersfield, California, 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 (or years) 1917, 1918, 1919, 1920, 1921, under existing revenue acts, or under prior revenue acts.

This waiver of the time for making any assessment 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 *277 days between the date of mailing of said notice of deficiency and the date *1885 of final decision by said Board.

(Signed) MRS. LILLIE M. JONES,

Taxpayer.

By

ROBT. H. LUCAS, Commissioner.

W.T.S. t

3/28/30.

The said writing was procured from her by an internal revenue agent who filed the same in the Bureau of Internal Revenue, where it was signed by or for the Commissioner on March 28, 1930.

In 1924 and in 1925 prior and subsequent to the date, August 20, 1925, of the signing of said paper by Mrs. Lillie M. Jones, one Scott Carter represented petitioners in tax matters before the Bureau of Internal Revenue. Said Carter was so employed in 1925 and in that year filed a claim in abatement in behalf of the estate of Elmer E. Jones against the assessment of an additional tax for the year 1920, which tax is the subject of these proceedings. After the date of the filing of said abatement claim some correspondence was had with the Bureau of Internal Revenue by Carter touching the subject and in December, 1927, he had conferences with officials of the Bureau of Internal Revenue in Washington, D.C., in an effort to effect a satisfactory settlement of the tax matter involved herein, but without success.

On January 20, 1926, a notice addressed *1886 to "Mrs. Lillie M. Jones, Administratrix, Estate of Elmer E. Jones, 2004 Truxton Ave., Bakersfield, California," was mailed to her by the Assistant to the Commissioner of Internal Revenue, stating, "there has been assessed against you an income and profits tax amounting to $38,761.19 for the taxable year 1920 * * *."

Under date of October 12, 1926, the petitioner, Lillie M. Jones, wrote the Commissioner, referring to the said assessment, and stated that valuation data relative to the revaluation of the property (Elmer E. Jones property) as of November 20, 1918, had been compiled and was ready for presentation and requested that a date for conference be set so a representative of the estate might appear and present data.

OPINION.

SEAWELL: The decision of the first issue is controlled by .

The second issue it is not necessary to decide, in view of our decision on the third issue.

*278 The third issue is whether the proposed deficiency in tax is barred by the statute of limitations.

Under the provisions of section 250(d) of the Revenue Acts of 1918 and 1921, and the related provisions of subsequent acts, the *1887 tax against the said Jones estate could be assessed and collected within five years from the date the return was filed, or until March 15, 1926. On August 20, 1925, and within the statutory period, the paper writing set out in our findings of fact, purporting on its face to be an "Income and Profits Tax Waiver," was signed by Mrs. Lillie M. Jones, stated in the paper to be the administratrix of the estate of E. E. Jones, who was the heretofore-mentioned decedent. The paper purporting to be a "waiver," if effective as such, extended the period for such assessment against the taxpayer to December 31, 1926.

At the time Mrs. Lillie M. Jones signed the alleged "waiver" she was not the administratrix of the estate of Elmer E. Jones, deceased, having by proper court proceedings been discharged as such in December, 1922. While her name appears in the body of the paper writing as administratrix, she did not sign as such and, not being in fact administratrix, had no authority to so sign.

The paper writing termed a "waiver" and signed by "Lillie M. Jones, Taxpayer" on August 20, 1925, did not extend the five-year period for the determination and assessment of any tax deficiency against *1888 the estate of Elmer E. Jones. .

The assessment of an income and profits tax of $38,761.19 against the said Jones estate for the year 1920 was made and notice of same mailed to Mrs. Lillie M. Jones, as administratrix of said estate as indicated in our findings of fact, within the statutory period of five years from the filing of the 1920 tax return by said administratrix. Cf. .

The provisions of section 280(b)(1) of the Revenue Act of 1926, enacted February 26, 1926, extended the period of limitation for assessment of any liability of the petitioners, as transferees for unpaid taxes of the taxpayer, one year after the expiration of the period of limitation for assessment against the transferor or to March 15, 1927. The respondent's notices to the transferee petitioners of their liability were mailed March 22, 1927, which is more than a year after the period for assessment against the transferor expired, and assessment against the petitioners is barred.

Judgment of no deficiency will be entered.