1929 BTA LEXIS 2704">*2704 Motion for judgment on the record holding deficiency barred by the statute of limitation denied.
15 B.T.A. 1215">*1215 The Commissioner determined a deficiency in income and profits tax of $884,393.68 stated in the deficiency notice mailed to the petitioner to be for the taxable period May 1 to December 31, 1918. Petitioner filed a motion for judgment upon the pleadings of no deficiency upon the ground that the statute of limitation bars assessment and collection of the tax.
15 B.T.A. 1215">*1216 FINDINGS OF FACT.
The petitioner was incorporated under the laws of the State of New York, July 18, 1905, and up to May 1, 1918, was engaged in operating a hotel located at the corner of Park Avenue and 42nd Street, in the City of New York.
From the date of its organization to the time of its dissolution in 1918, petitioner kept its books upon a calendar year basis and from 1909, the date of the incidence of the corporation excise tax, it made its Federal tax returns upon a calendar year basis.
May 29, 1918, petitioner sold as of May 1, 1918, all of its assets, 1929 BTA LEXIS 2704">*2705 consisting of its leasehold, furnishings and good will, as a going concern, to the B.L.M. Bates Corporation for a total consideration of $3,800,000.
March 13, 1919, the petitioner filed a tentative return of income realized from its operations, which return was stated to be "for the four months ended April 30, 1918," and showed an estimated amount of tax of $2,145.23. In explanation of the quoted statement in the return it was alleged that "The company ceased operations on May 1, 1918, and is in process of liquidation."
June 14, 1919, petitioner filed its final return showing total taxes for the year 1918 of $1,504.92. This return recited that it was for the "August Belmont Hotel Co. in Liquidation (formerly) 120 Park Avenue, New York City," and it was also stated therein "Net Income for Taxable Year (Item 25, Schedule A, page 2) 4 months from January 1, 1918, to April 30, 1918," and further "Company ceased operations on April 30, 1918, and went into dissolution."
No penalty for delay in filing of its returns for the year 1918 was ever attempted to be imposed by the Bureau of Internal Revenue. No waiver was ever filed by or on behalf of petitioner for the year 1918.
In1929 BTA LEXIS 2704">*2706 January, 1920, examining officers of the Bureau of Internal Revenue, working out of the office of the collector of internal revenue for the third district of New York, made an examination of the returns filed by the August Belmont Hotel Co. for the year 1918, in the course of which the sale by the petitioner of its assets in 1918, as above stated, was fully investigated, and evidence was filed by the taxpayer which was accepted by the Bureau as establishing that no profit was realized upon the sale of the assets of the petitioner, and, as a result of certain adjustments in income of the company from its operations to the date of sale of its assets, the petitioner was, under date of May 12, 1922, allowed a refund of the full amount of tax paid for the year 1918, to wit, $1,504.92.
On April 22, 1926, the Commissioner mailed the petitioner a deficiency notice in which he stated that "An audit of your income and excess profits tax return for the taxable period May 1 to December 15 B.T.A. 1215">*1217 31, 1918, has resulted in the determination of a deficiency in tax of $884,393.68 as shown in the attached statement." The statement attached to the notice shows the deficiency stated to be for the1929 BTA LEXIS 2704">*2707 period May 1 to December 31, 1918.
OPINION.
LITTLETON: Upon the foregoing facts petitioner moves that judgment of no deficiency, by reason of the tolling of the statute of limitation, be entered in this proceeding.
There is another issue which goes to the merits of the tax to be heard and determined in the event this motion for judgment is not sustained.
The facts contained in the record are not sufficiently clear and specific to justify the Board in concluding that assessment and collection of the deficiency involved is barred by the statute of limitation. The facts are confusing and contradictory and leave considerable doubt whether the statute of limitation has barred the assessment and collection of the deficiency which the record shows the Commissioner has determined for the period May 1 to December 31, 1918. Statutes of limitations sought to be applied to bar the rights of the Government must receive a strict construction in favor of the Government. .
The petitioner claims the return filed was for the entire calendar year 1918 but the facts in the record are not clear enough to support this contention. 1929 BTA LEXIS 2704">*2708 The tentative return shows it was for the period January 1 to April 30, 1918. The final return shows the taxpayer's income reported was for the four months January 1 to April 30, 1918. The facts show that a sale of the assets of petitioner was made on May 29, 1918, for $3,800,000 "as of May 1, 1918." Without more, these facts would indicate that the return was one for only four months of the year 1918. We do not have the return before us and no explanation is made of the matter. There are other facts to the effect that "on June 14, 1918, petitioner filed its final return showing a total tax for the year 1918 of $1,504.92" and that in January, 1920, a revenue agent made his examination of the return for the year 1918 in the course of which examination the sale of the petitioner's assets in 1918 was investigated, that the taxpayer filed evidence with the Bureau of Internal Revenue which was accepted by the Bureau as to establishing that no profit was realized upon the sale of the assets, and as a result of certain adjustments in the income of the corporation from its operations up to the date of its sale of assets the petitioner was allowed refund of the total tax paid but these1929 BTA LEXIS 2704">*2709 facts, standing alone, do not establish that assessment and collection 15 B.T.A. 1215">*1218 of the deficiency determined by the Commissioner is barred by the statute of limitation.
The motion for judgment is denied and the proceeding is restored to the calendar for hearing on the merits in due course.