*1176 Respondent allowed amortization deduction in computing deficiency in tax for the fiscal year ending 1918. No appeal was taken, but the parties were in controversy over the matter for several years. Petitioner appealed from a deficiency asserted for the fiscal year ending 1919, on the ground that part of the amortization allowed for the taxable year 1918 should be allowed to the following year. On that basis the appeal was settled, by stipulation of the parties. The amortization allowance for 1918 was thereby reduced one half. Thereafter respondent asserted a larger deficiency tax for the fiscal year 1918, based upon the reduced amount of amortization allowance. Held, such deficiency was attributable to change in deduction tentatively allowed, and under section 278(b), Revenue Act of 1926, the statute of limitations became inoperative.
*121 This proceeding is for the redetermination of a deficiency in income and excess profits taxes asserted by the respondent for the fiscal year ended September 20, 1918, in the amount of $16,305.78. The*1177 error alleged is that the statute of limitations has barred the assessment and collection of the deficiency asserted.
FINDINGS OF FACT.
The petitioner is a corporation. Its Federal income tax return for the fiscal year ended September 30, 1918, was duly filed on March 29, 1919. Waivers were filed which extended the statutory period of limitations for the taxable year to December 31, 1926. In its returns petitioner deducted $62,927.08 for the fiscal year 1918, and $10,385.12 for the fiscal year 1919, as amortization of war facilities.
Under date of August 4, 1923, respondent forwarded to petitioner a letter reading in part as follows:
An examination of your income tax returns together with the information heretofore submitted has been made, and the results thereof are outlined in the attached statement.
* * *
You may, if you desire, request a conference before the Income Tax Unit in connection with the appeal, to be held within the period prior to the expiration of five days after the time prescribed for the filing of the appeal. If the Income Tax Unit is unable to concede the points raised in your appeal, it will be transmitted, together with the recommendation*1178 of the Income Tax Unit, to such agency as the Commissioner may designate, for final consideration.
Attached to the letter was a statement in which amortization allowance was placed at $69,867.12, all of which was allocated to the year ended September 30, 1918, and none to the fiscal year 1919. Deficiencies in tax for both years were set forth in the statement.
On May 15, 1924, respondent notified petitioner that:
Inasmuch as all the points of difference between you and the Income Tax Unit relative to your income tax liability for the years covered in the statement herewith have been adjusted in accordance with the Committee on Appeals and Review recommendation #7490 immediate assessment of the additional taxes shown herein will be made.
The statement accompanying that letter dealt with the fiscal years ended September 30, 1918 and 1919. No change was made in the the liability for 1918 nor in the amortization allowance of August 4, 1923.
Under date of October 8, 1924, respondent notified petitioner that a deficiency in income and excess profits tax for the fiscal year 1918 had been determined in the amount of $3,813.67. In an attached statement petitioner was advised*1179 that its application for special assessment had been denied. No change was indicated in the *122 amortization allowance previously made. On December 23, 1925, the deficiency determination was protested by petitioner.
By letter dated February 2, 1926, respondent notified petitioner that a deficiency in tax had been determined for the fiscal year ended September 30, 1919. An appeal was filed on March 26, 1926, the issue therein being whether respondent was correct in allocating the total amount of allowable amortization to the fiscal year 1918. Pursuant to stipulation by the parties this Board decided that there had been an overpayment of tax for the fiscal year 1919, in the amount of $4,731.11. An order to that effect was entered on June 27, 1928. Computation of the amount stipulated was based upon allocation of amortization allowances as follows:
| 1918 | 1919 | |
| On assets acquired between April 6, 1917, | $34,858.95 | $21,488.86 |
| and September 30, 1918 | ||
| On assets acquired from September 30, | 10,074.23 | |
| 1918, to September 30, 1919 | ||
| Total | 34,858.95 | 31,563.09 |
Under date of April 1, 1926, respondent notified petitioner that a deficiency in tax for*1180 the fiscal year 1918 had been determined, in the amount of $3,514.66, pursuant to modification of respondent's letter of October 8, 1924. No change was made respecting the amortization allowance of August 4, 1923. Petitioner did not appeal.
Subsequent to the Board's order respecting the tax for the fiscal year 1919, the respondent, under date of September 10, 1928, notified petitioner of the determination of deficiency in tax for the fiscal year 1918, amounting to $16,305.78. In computing the tax, respondent allowed $34,858.95 for "corrected" amortization in accordance with the allocation above set forth.
OPINION.
MARQUETTE: As extended by waivers, the period fixed by the statute of limitations for taxing petitioner's income for the years here involved expired about a year and one half before the date of the deficiency notice here appealed from. Respondent contends that the limitation statute is inoperative. His position is that prior to his deficiency letter of September 19, 1928, there had been only a tentative deduction for amortization allowance for the fiscal year 1918, within the meaning of section 278(b) of the Revenue Act of 1926, reading as follows:
* * * Any*1181 deficiency attributable to a change in deduction tentatively allowed under paragraph (9) of subdivision (a) of section 214, or paragraph (8) of subdivision (a) of section 234, of the Revenue Act of 1918 or the Revenue Act of 1921, may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time. *123 The sections of the Revenue Acts of 1918 and 1921 referred to deal with deductions for the amortization of war facilities.
A "tentative deduction" is one which is allowed provisionally, experimentally. It lacks finality, and is to be replaced later by a permanent allowance.
In this proceeding, the first mention of allowance for amortization is contained in respondent's letter of August 4, 1923. For several years thereafter the deficiency proposed in that letter and computed upon the amortization allowance of that date was the subject of numerous communications between petitioner and respondent. In none of them does it appear that any permanent, final deduction for amortization allowance was made.
In 1926 petitioner appealed from a determination of deficiency for the fiscal year 1919. That appeal was based upon the*1182 ground that the allocation of the allowance for amortization entirely to the fiscal year 1918, the one now before us, was incorrect because a part of the allowance should have been allocated to the taxable year 1919. The outcome of that appeal was favorable to petitioner. It was based upon a reallocation of the amortization allowance, and was stipulated by the parties. As a result, the amortization deduction for petitioner's fiscal year 1918 was reduced by more than 50 percent of the amount originally allowed by the respondent. The present deficiency is computed upon the basis of such reduced amortization.
Petitioner does not dispute the accuracy of respondent's computation, nor that the deficiency asserted is unjust or excessive, but insists that the statute above cited does not apply here, and relies upon ; affd., , and upon . In each of those cases the taxpayer acquiesced in the net income determination, based upon an amortization allowance, for special assessment purposes. It was held that after such acquiescence the allowance*1183 could no longer be considered tentative. But in the present case petitioner never acquiesced in the tentative amortization allowance.
In , also cited by petitioner, the taxpayer had claimed amortization allowance in its return. In the 30-day letter it was stated that the amortization claimed was disallowed, subject to review by the Department, and we held that such disallowance was not a tentative allowance under the statute above cited. We do not consider that decision controlling. The statute removes the bar of limitation with respect to tentative allowances only. Obviously, if an amortization deduction is disallowed it cannot be said to have been allowed at the same time *124 and by the same determination. But that is not our present case by any means.
In this proceeding a deduction for amortization was tentatively allowed, and upon that basis a deficiency was proposed for the fiscal year 1918. Thereafter for several years the parties were in dispute over the whole matter. While that dispute was going on the petitioner appealed from a deficiency determination for the fiscal year 1919. The sole issue raised*1184 in that appeal was whether the amortization allowance for the fiscal year 1918 was correct, petitioner insisting that it was too great and that a part of it should be allocated to the fiscal year 1919. Up to that time, and until the appeal was determined, there was no agreement between the parties respecting the amortization allowance for the fiscal year 1918.
Petitioner lays stress upon the fact that it never appealed from respondent's earlier determination of deficiency for the fiscal year 1918. Technically, the statement is true. Actually, it is incorrect, for the appeal respecting the year 1919 necessarily involved the year 1918 in respect of amortization allowances, and upon those allowances petitioner's tax liability in large part depended. Thus the tax liability for the fiscal year 1918 was in effect brought into question just as certainly as it would have been under a separate appeal. The appeal respecting the year 1919 challenged respondent's amortization allowances for the fiscal year 1918, and effectually kept alive the controversy respecting that year.
In the light of the entire record it cannot justly be said that respondent's deduction for amortization allowance*1185 was other than tentative, prior to his letter of September 10, 1928. By protests and waivers, and by its appeal respecting its 1919 taxable year, petitioner kept open and alive the question of amortization deduction for the fiscal year 1918. As a result of petitioner's own acts the amortization deduction allocable to the year before us was finally settled. Petitioner benefited by that determination with respect to one year, but now seeks to escape the resultant effect upon its tax for that other year involved in the determination.
The situation here is not unlike that in . In that case the taxpayer was deficient in tax for the years 1917 and 1918, but had overpaid its tax for the years 1919, 1920 and 1921. The taxpayer filed a claim for credit, requesting that the overpayments be applied against the deficiencies for the earlier years. By this means the Commissioner was induced to refrain from collecting the deficiency when he might have done so. He made thorough investigation of the claim for credit before acting upon it. After expiration of the *125 period of limitations for*1186 collecting the deficiencies the taxpayer brought suit to recover the amount of its overpayment, which meanwhile had been credited against the deficiencies. The court held that taxpayer bound by the doctrine of equitable estoppel and denied the recovery sought. That doctrine is equally applicable here. We see no essential difference between the case cited and the present proceeding. In each the taxpayer sought and obtained an advantage in respect of one taxable year or group of years, meanwhile keeping open the matter in respect of an earlier taxable year or group of years. In each the taxpayer did not dispute the justness nor the amount of the deficiency asserted, but, once having obtained the desired benefit, endeavored to turn that benefit and the means of its accomplishment into a vehicle of escape from proper taxation.
We think the respondent's contention should be sustained.
Decision will be entered for the respondent.