3 Or. Tax 185 | Or. T.C. | 1968
Decision for defendant rendered February 9, 1968.
The tax commission disallowed plaintiffs' special treatment of capital gains from the sale of certain corporate stock and plaintiffs appealed. The disallowance was based on the ground that plaintiffs' election to report the sale of the stock for special capital gains treatment was not made within the time required by ORS
"(1) The taxpayer in order to qualify for special treatment of his capital gains shall make an election to do so by making a statement in substantially the following form on his tax return:
'I elect to report the following described capital gains for special treatment pursuant to ORS
316.405 to316.450 (listing the capital gain).'"(2) The election shall be made within one year after the close of the tax year in which any part of the capital gain is realized. If the taxpayer elects to have special treatment of his capital gains for a tax year, the provisions of ORS
316.436 to316.450 shall apply to that tax year."
1. As plaintiffs' sale of the stock was made in 1961, under the above statute they had until December 31, 1962, to report the sale for special capital gains treatment. Under the capital gains statutes in effect at that time, ORS
The plaintiffs concede that they did not comply with the provisions of ORS
First, plaintiffs allege that an extension of time granted them to file their 1961 return should also extend the time to report the election for special capital gains beyond the December 31, 1962 deadline.
The facts, which have been stipulated, show that on April 16, 1962 plaintiffs' accountant applied for and received a six months' extension of time for filing their 1961 state tax return. The application for the extension stated the following as the reasons for the request for the extension:
"A ruling has been requested from the Internal Revenue Service as to the proper handling of certain transactions occurring in the 1961 year. No final decision has been received and we would very much appreciate the extra time in order that proper consideration may be given to the ruling and the *188 required reconciliations between federal and state tax returns. A check in the amount of $10,250.00 is attached to be applied against the tax liability reflected on the return when filed."
The form used for the extension stated: "NOTE: AN EXTENSION CAN NOT BE GRANTED FOR A PERIOD IN EXCESS OF SIX MONTHS FROM THE DUE DATE. THE RETURN MUST BE FILED WITHIN THIS PERIOD."2
2. Plaintiffs' extension of time for filing their 1961 return expired on October 16, 1962. Their return, however, was not filed until March 15, 1963, or three and one-half months after December 31, 1962, the time allowed by ORS
3. When the plaintiffs requested the extension they submitted a check for $10,250.00 to apply against their 1961 tax liability.3 Plaintiffs now argue that their 1961 return, which reported the election and which was filed on March 15, 1963, relates back to April 16, 1962, when they requested the extension. This argument is difficult to follow and plaintiffs cite no authority for their position. Again there is no reason why a return filed five months after the expiration of an extension should relate back to the time of the application for the extension whether a tentative payment was submitted or not.
4. Plaintiffs state also that they should have had an extension of time to report the election because ORS
5. Plaintiffs' argument that they should prevail because their actions constituted a substantial compliance with ORS
6. Finally, the plaintiffs urge that they did in fact report the election because in the fall of 1962 their accountant orally advised an auditor for the tax commission that plaintiffs planned to elect the special capital gains treatment when they filed their 1961 return. Again, ORS
Because plaintiffs neither reported their election within the time allowed by the extension nor in the manner or by the time allowed by ORS
The order of the commission is affirmed.
"(1) Returns shall be in such form as the commission may, from time to time, prescribe and shall be filed with the commission on or before the fifteenth day of the fourth month after the expiration of the tax year. The commission may allow further time for filing returns except that no extension may be granted for more than six months. * * *"
"(1) Tentative returns. The filing of a 'tentative return' which does not reveal the details of income or deductions is not considered a filing within the meaning of ORS