*2910 1. A letter dated August 10, 1925, from the Commissioner of Internal Revenue, advising petitioner that its claim for abatement of assessments made on its tax return for the year 1918 had been both allowed and rejected in part and asserting new deficiencies accordingly, is such a determination of a deficiency by the Commissioner after June 2, 1924, as to give the Board jurisdiction to hear and determine an appeal therefrom. Appeal of Matteawan Mfg. Co.,4 B.T.A. 953">4 B.T.A. 953.
2. The consolidated return of two corporations, though affiliation be later denied, will remain the return of each corporation and the statute of limitations will start from the date of the filing thereof. Stetson & Ellison v. Commissioner,11 B.T.A. 397">11 B.T.A. 397, followed.
3. Where return for 1918 was filed June 12, 1919, a deficiency assessed October 6, 1919, was not barred by the statute of limitations at August 10, 1925.
*789 This appeal has to do with an alleged deficiency in income and profits taxes for the year 1918, the facts and circumstances*2911 attending its determination being as follows:
FINDINGS OF FACT.
Petitioner, a New York corporation, filed with the collector of internal revenue for the second district of New York on the 15th day of March, 1919, its tentative income and profits-tax return for the year 1918, showing an estimated income and profits-tax liability *790 in the sum of $40,000, and simultaneously therewith paid to the collector its first installment of $10,000. On the same date the Henderson Estate Co., a corporation, likewise filed with said collector its tentative income and profits-tax return for the year 1918, showing an estimated income and profits-tax liability of $4,000, paying also its first quarterly installment of $1,000. On the 12th day of June, 1919, these two corporations filed their consolidated income and profits-tax return of net income and invested capital for the year 1918, as affiliated corporations, showing a total joint tax liability of $33,303.44.
The name of the Henderson Estate Co. appeared first upon this return and on October 6, 1919, the Commissioner assessed said company for the full amounts shown thereon, all of which the petitioner paid, after taking credits*2912 for payments made by these companies at the time of the filing of their respective tentative returns.
On October 6, 1919, the Commissioner made a separate assessment against petitioner, upon its tentative return, but there is no evidence of any notice to it of said assessment until more than five years later, when on November 6, 1924, by letter bearing symbols "IT:CR:CJJMcD" the Commissioner advised petitioner that an examination of its return for the year 1918 disclosed a deficiency as follows:
| Total tax liability | $35,147.96 |
| Previously assessed | None. |
| Tax to be assessed | 35,147.96 |
Said letter also advised petitioner that it had 30 days within which to protest "against this determination of a deficiency."
On June 21, 1924, the Commissioner notified the Henderson Company, by letter bearing symbols "IT:E:AF CEL" that it and the petitioner were not affiliated corporations during said taxable year. It was following this last mentioned ruling of the Commissioner that petitioner received notice of the assessment hereinbefore mentioned.
Upon receipt of this notice of assessment, of November 6, 1924, petitioner upon advice from agents of the collector of internal*2913 revenue for the second district of New York, filed with the Commissioner on November 19, 1924, a claim for the abatement of the $40,000 assessment made against it upon the basis of its tentative return, to which claim was appended the following statement:
This Claim for Abatement of $40,000.00 is filed for the reason that the assessment appearing on the books of the Collector of Internal Revenue, 2nd District, New York, is based on the tentative return filed in March, 1919. Tentative return did show an estimated tax of $40,000.00 which was assessed, but in June 1919 the Matteawan Mfg. Co. filed a final consolidated return, together with the Henderson Estate Co. The total tax shown on the final return was *791 again assessed in the amount of $33,303.44. This entire amount was paid as follows:
| March 15, 1919 | the Henderson Estate Co | $1,000.00 |
| By Matteawan Mfg. Co | 10,000.00 | |
| June 15, 1919 | By Matteawan Mfg. Co | 5,651.72 |
| Sept. 15, 1919 | By Matteawan Mfg. Co | 8,325.86 |
| Dec. 15, 1919 | By Matteawan Mfg. Co | 8,325.86 |
| 33,303.44 |
It is apparent from the foregoing that the $40,000.00 assessment against the Matteawan Mfg. Co. should be abated as the tax*2914 of this company is included in the consolidated return filed in June, 1919, and all of these taxes have been paid. The Collector's office was in error in assessing the tax shown by the tentative return, as well as the final return which accounts for the present outstanding assessment.
On January 27, 1925, by letter bearing symbols "IT:CR:CJJMcD" the Commissioner notified the Henderson Company of an overassessment against it of taxes for the year 1918, in the sum of $32,880.51, such being the amount of petitioner's tax as shown in the consolidated return, and suggested that an application for refund for this amount be made by it. This was done and said amount, together with payments made for the year 1919, with interest, was refunded to the Henderson Company on June 10, 1925.
On August 10, 1925, by letter from the Commissioner bearing symbols "IT:CR:C JDK," petitioner was notified that its claim for refund was rejected, and that its claim for abatement to the extent of $35,147.96 was rejected, but allowed to the amount of $4,852.04, said latter sum being the amount by which the $40,000 assessed against petitioner upon its tentative return filed March 15, 1919, was reduced to*2915 correspond to its true liability as shown in the consolidated return filed by the Henderson Company on June 12, 1919. It is from this ruling that the petitioner appeals, pleading the statute of limitations.
OPINION.
LANSDON: In our settlement of the issues of this proceeding we must determine: (1) Which, if any, of the letters addressed by the Commissioner to the petitioner is a deficiency notice under the provisions of section 279 of the Revenue Act of 1924, and (2) the nature, effect, and authority of and for the assessment made on October 6, 1919, whether such assessment was based on a return required by law, and if so, whether its collection is barred by the five-year period of limitation then in force, or is governed by the six-year period provided by the Revenue Act of 1924.
In denying the respondent's motion to dismiss this proceeding for lack of jurisdiction in this Board we held that the respondent's letter *792 of August 10, 1925, is a deficiency notice within the meaning of section 279 of the Revenue Act of 1924. *2916 . Upon authority of that decision we now proceed to consideration of the merits of the issues in controbersy.
On June 12, 1919, the petitioner and the Henderson Manufacturing Co. filed a consolidated return which was at first rejected, afterwards accepted, and finally rejected by the Commissioner. That return which is in evidence here sets forth the basis upon which affiliation was claimed and among other things asserts that a very large majority of the stock of each of the two corporations was owned by the other or by interests that were alleged to be identical. We are of the opinion that upon the record there was sufficient basis for the taxpayers to conclude that they were entitled to file a consolidated return. This return was accompanied by the information returns of the two corporations, as required by law, and includes or has attached tereto schedules containing all the information necessary to the determination of the tax liability of the two corporations either as an affiliated group or as separate taxable entities. In passing on the question of jurisdiction to hear this proceeding, we have already held that*2917 the consolidated return filed on June 12, 1919, was the return required by section 239 of the Revenue Act of 1918. Upon a further consideration of the record we adopt the result there reached as our conclusion and opinion in the instant proceeding. ; .
On October 6, 1919, the Commissioner made a separate assessment against the petitioner in the amount of $40,000 of the tax liability based on the tentative return filed on March 15, 1919. On November 6, 1924, the Commissioner made a second separate assessment in the amount of $35,147.96, based on the information contained in the consolidated return and, in the accompanying letter, stated that there was then no previous assessment against the petitioner. Whether the Commissioner regarded the assessment made on October 6, 1919, as a perfunctory recognition of the liability theretofore acknowledged by the petitioner or whether such assessment was based on the tentative return filed on March 15, or the consolidated return filed on June 12, 1919, is*2918 not material, since the assessment was made on the basis of returns of the taxpayer then in the possession of the Commissioner and at a date when he had the authority so to assess. It follows, then, that the five-year statutory period under the Revenue Act of 1918 within which the respondent could proceed to collect by proceeding in court, distraint, or otherwise, began to run on June 12, 1919.
The Revenue Act of 1924 was enacted on June 2 of that year, and on that date the collection of the assessment of October 6, 1919, *793 was not barred. It follows, therefore, under section 278(d) of such Act, that the Government had six years from the date of such assessment in which to begin action for collection. The 6-year period had not expired at August 10, 1925, and on that date authority to collect the deficiency herein asserted was not barred by the statute of limitations. ; ; ; *2919 .
Decision will be entered for the respondent.