*2571 1. A waiver of the time prescribed for assessment of Federal income taxes executed by an executor pursuant to the provisions of the Federal revenue laws is not rendered invalid by any state law. Estate of John F. Dodge,13 B.T.A. 201">13 B.T.A. 201, followed.
2. Held, that the fact that only one of the two executors was a party to the consent does not invalidate it.
3. Held, that there is insufficient evidence to determine the depreciation sustained by a corporation on its improvements to realty.
4. The amount of a taxable dividend declared by a corporation to the petitioner determined.
*510 This is a proceeding for the redetermination of a deficiency in income taxes for the calendar year 1920 in the amount of $3,614.06.
It is alleged that the assessment and collection of the proposed deficiency is barred by the statute of limitations and that the respondent erred in finding that the decedent received a taxable dividend of $27,259.77, or of any amount in excess of $177.13, from the Bartlett Brothers*2572 Investment Co. during the taxable year 1920.
FINDINGS OF FACT.
The petitioners are the executors of the estate of Herschel Bartlett, deceased. The decedent died on November 11, 1923. He filed his income-tax return for 1920 with the collector of internal revenue at St. Joseph, Mo., on March 15, 1921. The deficiency proposed by the respondent was not attributable to a change in deduction tentatively allowed under paragraph 9 of subdivision (a) of section 214, or under paragraph 8 of subdivision (a) of section 234 of the Revenue Act of 1918. On or about December 5, 1925, one of the executors, Philip C. K. Bartlett, executed on behalf of the estate the following instrument in writing:
INCOME AND PROFITS TAX WAIVER.
For Taxable Years Ended Prior to January 1, 1922.
December 1, 1925.
In pursuance of the provisions of existing Internal Revenue Laws, P. C. K. Bartlett, executor of Herschel Bartlett, deceased, a taxpayer of St. Joseph, *511 Missouri, and the Commissioner of Internal Revenue hereby waive the time prescribed by the law for making any assessment of the amount of income, excess-profits, or war-profits taxes under any return made by or on behalf of*2573 said taxpayer for the year (or years) 1920 and 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 deficiency in tax is sent to said taxpayer by registered mail before said dates 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) P. C. K. BARTLETT,
Executor of the Estate of Herschel Bartlett, deceased.
By D. H. BLAIR,
Commissioner.
The executrix, Emilie P. Bartlett, did not join in the execution of the above instrument and no order of court authorizing the same or ratifying the action of Philip C. K. Bartlett in so doing was ever entered on the records of the Probate Court of Buchanan County, Missouri, where the estate of Herschel Bartlett, deceased, was in probate. On December 9, 1926, the respondent mailed a*2574 deficiency notice to the executors of the decedent for the year 1920, from which the executors took this appeal.
In his return for the year 1920, Bartlett reported $17,001.84 as dividends received. The respondent held that the dividends received amounted to $39,667.71. This was caused, at least in part, by the respondent's adding an alleged taxable dividend of $27,259.27 growing out of a distribution made by the Bartlett Brothers Investment Co. to the decedent on April 19, 1920.
The respondent found that the capital and earned surplus of the Bartlett Brothers Investment Co. as of March 1, 1913, was $1,274,193.76, and that the earned surplus as of April 19, 1920, which accrued between March 1, 1913, and April 19, 1920, was $81,777.81, determined as follows:
| Capital and surplus Mar. 1, 1913 | $1,274,193.76 | |
| Earnings Mar. 1, 1913 to Dec. 31, 1913 | 43,278.99 | |
| 1914 earnings | 17,266.31 | |
| Capital and surplus Dec. 31, 1914 | 1,334,739.06 | |
| Dividend paid Dec. 31, 1914 | 240,000.00 | |
| 1913 capital and surplus remaining | 1,094,739.06 | |
| Capital and surplus Jan. 1, 1920 | 1,172,728.08 | |
| Remaining earnings from Mar. 1, 1913 to | ||
| Jan. 1, 1920 | 77,989.02 | |
| 1920 book earnings | $18,272.62 | |
| Special tax charged to expense | 3,890.39 | |
| 22,163.01 | ||
| Earnings attributable to period prior to | ||
| Mar. 1, 1913 | 9,441.02 | |
| Earnings for year | 12,721.99 | |
| Earnings for 1 day | 34.7595 | |
| Earnings to Apr. 19, 1920 | $3,788.79 | |
| Taxable dividend Apr. 19, 1920 | 81,777.81 | |
| 1/3 to taxpayer Apr. 19, 1920 | 27,259.27 |
*2575 *512 The earned surplus and capital of the Bartlett Brothers Investment Co. as of March 1, 1913, was $1,231,376.90. Of this, $1,201,376.90 represented earned surplus.
The earnings of the company were as follows:
| 1913 | $43,278.99 |
| 1914 | 17,266.31 |
| 1915 | 9,928.74 |
| 1916 | 8,858.29 |
| 1917 | 10,247.01 |
| 1918 | $16,237.51 |
| 1919 | 5,552.16 |
| 1920 | 18,272.62 |
| 129,641.63 |
On March 1, 1913, the Bartlett Brothers Investment Co. owned numerous improved properties in the City of St. Joseph, Mo., and in Buchanan County, Mo. Subsequent to March 1, 1913, it acquired certain additional improved properties. Between January 1, 1913, and December 31, 1920, no depreciation whatsoever was written off on account of any of its depreciable properties, either on the books or on the income-tax returns which it filed.
On April 19, 1920, the Bartlett Brothers Investment Co. paid a dividend of $527,281.15, of which $349,381.15 was paid to Grace Bartlett, Latham Bartlett, and the decedent, in equal proportions, and $177,900 of which was paid to other parties. Herschel Bartlett, at the date of the dividend, owned one-third of the stock of the Bartlett Brothers Investment Co.
The*2576 Bartlett Brothers Investment Co. filed a claim for refund of income taxes for the years 1920 and 1922, based in part on the failure of the company to deduct depreciation on some of the foregoing properties for the year in question. The Commissioner allowed this claim for refund.
OPINION.
SIEFKIN: Herschel Bartlett filed his income-tax return for the year 1920 on March 15, 1921. The notice of deficiency in tax for the year 1920 was mailed by respondent on December 9, 1926. On or about December 5, 1925, P. C. K. Bartlett, one of the executors of the estate of Herschel Bartlett, executed on behalf of the estate *513 an instrument in writing purporting to extend the time for making assessment of the 1920 taxes to December 31, 1926.
The petitioner contends that since no order was issued by the county probate court authorizing or ratifying this action of P. C. K. Bartlett, and that since, in fact, the law of Missouri prohibits an executor from so binding an estate, the instrument executed by Bartlett is invalid as a waiver of the statute of limitations.
However, we have heretofore held, in *2577 , that a waiver of the time prescribed by law for the assessment of Federal income and profits taxes executed by an administrator pursuant to the provisions of the Federal laws is not rendered invalid by provisions of state laws or the decision of state courts prohibiting executors or administrators from waiving the running of the statute of limitations as to the claims against the estate.
We now turn to a consideration of the contention of the petitioner that the purported waiver is not binding upon the estate, since only one of the executors signed it.
In the case of Wintermute v. Redington, Fed. Cases No. 17896, decided by the District Court of the Northern District of Ohio, the court had under consideration the question of whether an assignment of a patent by one of two administrators passed title. In holding that such assignment did transfer title the court said:
Administrators of an estate are not, properly speaking, trustees in whom is vested the legal title. The law clothes them with certain powers, by which they are enabled to transmit the legal title of property. *2578 They are mere instruments of the law, and the effect is given to their acts upon the same principle that title to property is transferred by the official act of a sheriff or marshall; and it is well settled, that if a man appoint several executors, they are esteemed in law but as one person representing the testator. Acts done by one of them, which relate to the delivery, gift, sale, or release of the testator's goods or personal property, are deemed the acts of all. The same rule obtains with reference to the acts of administrators. . I am unable to see any force in the objection made to the assignment of McKelvy.
See also ; 3 Fed. Cases 1694, in which the Circuit Court of Appeals, District of Pennsylvania, stated:
* * * The executors or administrators of the deceased are considered in law as but one person, representing the testator; and the acts done by any one of them, which relate to the estate of their testator or intestates, are deemed the acts of all, inasmuch as they have a joint and entire authority over the whole. Godol, 134; Rolle, Abr. 924; *2579 ; Shep. Touch. 484, 485. A release of a debt, or judgment confessed by one executor, binds his companions. 1 Dyer, p. 23, pl. 146.
*514 It is our opinion that the instrument executed by P. C. K. Bartlett constitutes a consent in writing to a later assessment of the taxes of the estate for the year 1920 and is binding upon the estate. By its terms, this consent extended the time within which assessment might be made to December 31, 1926, and since the deficiency letter was mailed on December 9, 1926, assessment of taxes for the year 1920 is not barred by the statute of limitations.
The petitioners attempt to show that the dividend paid by the Bartlett Brothers Investment Co. on April 19, 1920, of which the decedent, Bartlett, received $116,460.38, was paid out of earnings accumulated prior to March 1, 1913, and is, therefore, not taxable. As grounds for such contention petitioners contend that the depreciation sustained between March 1, 1913, and April 19, 1920, offset the earnings during that period.
The petitioners have shown that during the period March 1, 1913, to April 19, 1920, the Bartlett Brothers Investment Co. charged off no amount*2580 for depreciation upon improvements on real estate, nor was any deduction therefor taken in any of the income-tax returns of that company during the period. They have proved the kind, quantity and value of the real estate improvements owned by the Bartlett Brothers Investment Co. on March 1, 1913, as well as the value of property acquired later and the improvements made since March 1, 1913. They also attempt to show that depreciation in the amount of $96,903.86 was sustained from March 1, 1913, to April 19, 1920. Exhibits submitted in evidence set forth the amounts which the petitioners claim should be allowed for depreciation. These show that a rate of 2 1/2 per cent was used in calculating depreciation on brick buildings and that a rate of 3 per cent was used in the case of frame buildings. The only evidence with regard to the amount of depreciation sustained was furnished by an accountant who prepared one of the exhibits. He testified that such exhibit, in his opinion, sets forth the true amount of depreciation sustained over the period. However, the record does not disclose that he was qualified to judge the length of life of various types of buildings and we can not accept*2581 his conclusion that the amount shown in the exhibit truly represents the depreciation sustained.
Since we have been furnished no evidence as to the length of life of the properties in question, we are unable to determine the amount of depreciation sustained and no deduction may be allowed therefor.
From the evidence in the case we are unable to determine the amount of earnings between March 1, 1913, and April 19, 1920, which were available for distribution as a dividend on the latter date, and we must accept the figure used by the respondent, $81,777.81.
The respondent has concluded that, since Bartlett owned one-third of the stock of the Bartlett Brothers Investment Co., he received a *515 taxable dividend of one-third of $81,777.81. However, the evidence discloses that on the total dividend of $527,281.15 distributed on April 19, 1920, Bartlett received $116,460.38. We must hold that that part of the $81,777.81 which bears the same ratio to the full amount of $81,777.81, as $116,460.38 bears to $527,281.15, was paid to petitioner as a dividend out of earnings accumulated after March 1, 1913, and is taxable.
Judgment will be entered under Rule 50.