202 Wis. 372 | Wis. | 1930
The following opinion was filed July 22, 1930:
We shall in this case adopt a different method of treatment than that ordinarily pursued. Four questions are raised which involve consideration of independent facts. We shall first state the facts relevant to a question, then the opinion in respect thereto will follow. The matters involved are stumpage values, land values, Below stock, and surtaxes.
Stumpage Values.
On January 1, 1911, the plaintiff owned 117,210.37 acres of land. The timber had been removed from about forty per cent, of this land prior to January 1, 1911. Plaintiff contends that upon that day there were upon the lands 177,134,911 feet of timber. Defendant computed the number of feet of timber at 197,028,866 feet. The defendant arrived at the amount of timber by taking the figure fixed by the March 1, 1913, federal questionnaire returned by the plaintiff and adding to it the amounts cut in 1911 to 1915, both inclusive, and adjusting purchases, sales, and costs.
The principal controversy arises in respect to the value of the standing timber. The commission was required to deal with a wasting asset acquired by the plaintiff long prior to January 1, 1911. In order to determine what income if any was apportionable to the years succeeding January 1, 1916, it was necessary for the defendant to fix the value of the plaintiff’s timber holdings as of January 1, 1911. Falk v. Wis. Tax Comm. 201 Wis. 292, 230 N. W. 64. Prior to December 28, 1909, the plaintiff had not carried its stand
Percentage
00 $600,000 00 13.16 50,000,000 ft. pine.
50 562,500 00 59.21 225,000,000 ft. hemlock ....
00 140,000 00 5.26 20,000,000 ft. basswood ...
00 24,000 00 .40 1,500,000 ft. oak .
00 120,000 00 10.53 40,000,000 ft. birch.
00 60,000 00 3.16 12,000,000 ft. ash.
00 100,000 00 5.26 20,000,000 ft. elm.
50 21,250 00 2.23 8,500,000 ft. tamarack . . .
00 15,000 00 .70 3,000,000 ft. miscellaneous
100.00 380,000,000 ft. $1,642,750 00
Land account . $625,271 40
113,685.71 acres @ $6 per acre. 682,114 26
Less same acreage as inventory of December 31, 1908, @ .50 per acre.. 56,842 86
Credited to surplus account. $625,271 40
Referring to this statement, if we divide the total value of the timber, $1,642,750, as fixed by the resolution, by the total number of feet, 380,000,000 feet, we get a weighted average or unit value of $4.32 per thousand feet. Applying this to the amount of timber claimed by the plaintiff to be on hand January 1, 1911, 177,134,911 feet, gives a total stumpage value of $765,222.82. The commission, however, arrived at a different amount. It took the actual cutting records of the defendant, from which it found that the plaintiff had on January 1, 1911, 197,028,866 feet. Allowing $12 per M for pine and $2.25 per. M for other woods gave a total value of $857,682.64. Dividing the total value by the total number of feet gives a weighted average of $4.35 per M. There was testimony offered in the record to the effect that the principal tracts of pine had been cut prior
It is argued by the taxpayer that the uniform rate should be applied even though a higher rate of depletion had been taken in prior years, because the taxpayer, the commission, or any one else cannot now ascertain the amount of timber of the various species which was on hand January 1, 1916. It is considered, however, that the evidence amply sustains a finding that the timber on hand January 1, 1916, as it stood on January 1, 1911, was fairly worth, as found by the commission, $2.25 per thousand. Whether or not if we were the original triers of the fact we should arrive at that conclusion, certain it is that there is sufficient evidence to sustain the finding of the commission to that effect. It is considered, therefore, that the determination of the commission with respect to the amount of stumpage on hand and the rate of depletion must be sustained.
Land Values.
A reference to the table already referred to will disclose that on January 1, 1909, the company had 113,685.71 acres which it valued at $6 per acre. From time to time the company appreciated the value of this land upon its books, and on January 1, 1911, it stood at $7 per acre, and on January 1, 1914, at $11 per acre. Thereafter there was a conference between the taxpayer and the commission and the land inventory was appreciated an additional $1.50 per acre, bringing its book value to $12.50. The last item of appreciation of $1.50 per acre was reported and upon it the taxpayer paid a tax. It is also contended by the taxpayer that it paid a tax upon the appreciation taken after January 1, 1911, and before the last item of appreciation of $1.50 per
All of the real-estate sales made by the taxpayer were made on a basis of a down payment of more than twenty-five per cent, of the purchase price. In reporting its income the taxpayer reported to the commission these sales, gave the total selling price, the amount of the down payments, the year of the sale, the amount paid in subsequent years, and allocated to each payment its proportion of the profit. In making its reassessment the Tax Commission treated these sales as completed sales in the year in which they were made and computed the tax accordingly. The order of the Tax Commission by which it determined to treat sales as completed transactions where twenty-five per cent, or more was paid down, went into effect November 2, 1925. There can be no question but that the method pursued by the taxpayer accurately reflected its income. However, it distributed it over the years of payment, while the method pursued by the Tax Commission after 1925 allocated the total income to the year in which twenty-five per cent, or more of the selling price was received. It was plain from the reports made by the taxpayer that it followed the method of allocating the income to payment. The commission having accepted .these reports, no additional facts having been disclosed by the re-audit, it is considered that the method of the tax' payer should be adhered to for sales made prior to Novem
Below Limber Company Dividends.
The taxpayer owned stock in the Below Lumber Company for which it paid $24,700. In the year 1917 the Below Lumber Company took an inventory of its assets, increased the book value thereof so that the stock owned by the taxpayer was valued at $47,838.96, whereupon the taxpayer appreciated on its books the Below Lumber Company, reported $23,138.96 in that year as profit, and returned it as income in its 1918 report. The report for that year showed a loss, and no income tax resulted from including this item as profit in its report. The assets of the Below Lumber Company were liquidated in the years 1918, 1919, and 1920, the taxpayer receiving in dividends $47,935.29. The Tax Commission in its reassessment referred these liquidating dividends to the years in which they were received by the company and computed income accordingly.
The taxpayer objects to this proceeding because of the fact that it had reported a profit of $23,138.96 in its report for 1918 which was the subject of a conference and deliberate allowance by the Tax Commission. This contention would find some support in State ex rel. Schuster Realty Co. v. Wis. Tax Comm. 184 Wis. 175, 197 N. W. 585, 199 N. W. 48, did the transaction reported in 1918 result in income. We have recently held in O. H. Ingram Co. v. Wis. Tax Comm., ante, p. 202, 231 N. W. 160, that neither taxable income nor deductible loss results from the fluctuation in the value of corporate stock held by a taxpayer. The stock must be disposed of before either taxable income or deductible loss
Surtaxes.
It is also urged that the Tax Commission was in error in applying to the ascertained income so-called surtaxes. These include the teachers’ retirement fund (ch. 459 of the Laws of 1921 as amended) and the soldiers’ bonus (Laws 1919 (special session), ch. 5). While the so-called surtaxes involve some matters not applicable to ordinary income tax rates, in the main they are, so far as income is concerned, merely increases in the rate to be applied in the different brackets of income, and we see no reason why the increased rate should not be applied on a reassessment of the taxpayer’s income. If the taxpayer appreciated the value of its land, carried the appreciated value into' surplus and thereby made itself liable for a greater tax than it would otherwise have been required to pay, we do not understand how this method of procedure requires that the prescribed rate should not be paid upon the ascertained income. The commission’s determination in this respect is sustained.
We may be permitted to' observe generally that some of the questions presented in this case arise because of a tendency on the part of taxpayers to regard a tentative determination of the Tax Commission as if it were a judgment and so apply to it reasoning that would be applicable in matters res adjudicata. It is not intimated that these principles have been invoked in this case in terms, but a good deal of argu
By the Court. — The judgment of the circuit court is reversed, and the cause remanded with directions to enter judgment setting aside the reassessment and remanding the record to the Tax Commission with directions to reassess the tax as indicated in this opinion.
A motion for a rehearing was denied, without costs, on November 11, 1930.