Opinion
No. H-309.
May 6, 1929.
Action by the Union Company against the United States.
Plaintiff's petition dismissed.
This case having been heard by the Court of Claims, the court, on the stipulation of facts entered into by the parties and the evidence adduced, makes the following special findings of fact:
I. Plaintiff is a corporation and filed its return for income and profits tax for its fiscal year ending January 31, 1918, on March 23, 1918, showing a tax liability of $7,497.56, which sum was duly assessed and paid.
The Union Company also made and filed its corporation income and profits tax return for its fiscal year ending January 31, 1919, on July 2, 1919, showing a tax liability of $7,564.04, which was duly assessed and paid.
II. The Commissioner of Internal Revenue, by letter dated December 23, 1922, advised the Union Company that upon an examination of its income and profits tax returns for the fiscal years ended January 31, 1917, to January 31, 1920, additional taxes for the fiscal year ended January 31, 1917, were due in the amount of $209.09, and for the fiscal year ended January 31, 1918, in the amount of $6,179.41, for the fiscal year ended December 31, 1919, in the amount of $10,399.15, and that immediate assessment would be made of the said additional taxes for the years 1917 and 1918.
III. Said additional taxes of $209.09 for the fiscal year ended January 31, 1917, and $6,179.41 for the fiscal year ended January 31, 1918, were assessed against the Union Company on the commissioner's March, 1923, Special List No. 5, page 1, lines 1 and 12.
The Union Company on April 3, 1923, filed claims for the abatement of the additional taxes so assessed, and in support of the said claims presented to the Commissioner of Internal Revenue its protest, asking that the value of certain leaseholds as at the date of its organization be established as of that date; that its invested capital for each of the years for which profits taxes were assessable be adjusted to include therein the unamortized portion of the value of the said leaseholds; and that the gross income for each of the said fiscal years be reduced by a reasonable allowance for the exhaustion, wear, and tear of property (leaseholds) used in the trade or business.
IV. On October 13, 1923, the Commissioner of Internal Revenue advised the Union Company that no paid-in surplus in computing invested capital would be allowed in respect of leases of properties occupied by it, and that no depreciation on such leases would be allowed as deduction in computing taxable net income; that a recomputation of the tax liability of the Union Company for the fiscal years 1917 to 1920, inclusive, disclosed an additional tax liability for the year 1919 in the amount of $3,753.86, an overassessment for the year 1917 of $298.88, and an overassessment for the year 1918 of $4,365.24, and an overassessment for the year 1920 of $1,293.96.
On November 30, 1923, the Union Company paid an additional tax of $3,753.86 for the fiscal year ended January 31, 1919, and $1,814.17 for the fiscal year ended January 31, 1918. Of the additional tax so paid for the year 1918, payment of $1,383.75 was effected through bookkeeping entries made in the office of the collector of internal revenue for the eleventh district of Ohio, and in the office of the Secretary of the Treasury of the United States, by which a refund of $89.79 for the year 1917, and a refund of $1,293.96 for the year 1920, due to the Union Company because of taxes overpaid for those years, were credited against the additional tax found due for the year 1918.
On February 7, 1925, claims for refund were filed with the collector of internal revenue for the Eleventh district of Ohio by the said Union Company, in the sum of $445.48 for the fiscal year ended January 31, 1918, and $3,753.86 for the fiscal year ended January 31, 1919; the basis of said claims for refund being the same grounds as were stated in the plea of abatement.
V. On September 3, 1925, the Commissioner of Internal Revenue advised the Union Company that its claims for refund had been considered, and they were rejected in full.
VI. The fair value of the leases obtained by plaintiff on July 7, 1913, and held by it during the years involved in this case, was $50,000.
Ben Jenkins, of Washington, D.C. (Wallick Shorb, of Washington, D.C., on the briefs), for plaintiff.
L.A. Smith, of Washington, D.C., and Herman J. Galloway, Asst. Atty. Gen., for the United States.
This case has been submitted by plaintiff on the theory that certain facts exist of which there is no evidence in the case. There is absolutely nothing in the evidence from which the court can determine the amount of the net income, or the amount of invested capital, or the unamortized value of leaseholds during the years involved in the case. Without this evidence it is impossible for the court to determine what tax ought to have been assessed against the plaintiff.
The burden of proof is on the plaintiff to prove the facts establishing the invalidity of the tax. United States v. Anderson, 269 U.S. 422, 443, 46 S. Ct. 131, 70 L. Ed. 347; United States v. Mitchell, 271 U.S. 9, 12, 46 S. Ct. 418, 70 L. Ed. 799. The plaintiff having failed to sustain this burden, the petition must be dismissed. It is so ordered.