*1 be judgment the court below will remanded cause be will vacated proceed,as indicated direction opinion. In view of the fact Au- end in
petitioner’s term will come to engaged
gust of he this imposed him
serving a sentence not law, end that
in accordance with to the speedily
justice may accomplished more court direct
we will the Clerk down forthwith to
send our mandate
court below.
WIER LEAF LUMBER CO. COM- LONG MISSIONER OF REVE- INTERNAL NUE. 12447.
No. Appeals
United States Court of
Fifth Circuit.
March Judge, dissenting part.
Harry Jones, West, Jr., R. Milton H. Reilly, Phillips Thomas A. L. J. J. J. Lockett, Houston, Tex., petitioner. all of Caudle, Asst.Atty.Gen., Theron L. Geo. Stinson, Slack, A. Ellis N. A. F. Prescott *2 550 Sp. Atty. 26 Redstone, 710(c) to I. C. (3) (A), Assts. Sec. R. M. visions of
and Sumner
Int.Rev.Code,
Oliphant,
(3) (A) ?
Gen.,
710(c)
Coun-
Chief
U.S.C.A.
and Charles
§
Revenue, and
E.
sel,
Internal
C.
Bureau of
con
The Tax Court2 stated:
“The basic
Lowery,
Atty.,
of Internal Rev-
Sp.
Bureau
petitioner’s right
determining
sideration in
Asst,
Goodner,
Atty.
enue,
Sp.
to
and Helen
carryback
profits
to an excess
tax
un
credit
C.,
respond-
Gen.,
Washington,
for
all of
D.
provisions
(3)
the
of
710(c)
der
Section
ent.
depends
(A),
R.
I.
C.
the
whether
HUTCHESON,
and
HOLMES
Before
‘corporation’
profits
word
in
the excess
Judges.
Circuit
provisions
liqui
law
the code
of
includes
corporations
dating
within the tax credit
HUTCHESON,
Judge.
carry-back section.” Declaring that it does
deficiency
a
Having
do
claimed
to
not,
carry-back
the Tax Court denied the
1942,
year
and
profits
in
tax for
excess
years.
both
claims for
profits
to
unused excess
counterclaims
an
insisting
Petitioner
is here
that whatever
1944,
carry-back
credit
for 1943 and
parlous
be the the
state
other
of
words
review,
stipu
petition brings
for
up
on
crazy
patchwork
quilt
in the
used
assem
law,
facts,1
question
of first im
a
of
lated
blage
up
of unrelated
the In
acts
importance.
This
pression
prime
and of
Code,
“taxpayer”
ternal Revenue
the words
corporation which, pur
question
“Is a
is:
“corporation”
precise
by
are
and
definition
14, 1942,
adopted on Dec.
suant to resolution
ambigu
made words not of uncertain and
1942,
in
and continued
began
in
ous,
certain, meaning.
but of clear and
It
1944,
and
entitled
1943
in
calls
our attention the statements made
to
of the
1944 to the benefit
1943 and
case,
by
opinion
the Tax Court in
carry
pro-
in this
profits
back
credit
unused excess
found,
petitioner
1 Petitioner,
if
to
was
is entitled
a Texas
car-
ry
profits
an unused
a lum-
back
excess
credit
in
It
1907.
constructed
chartered
year
carry-back
Wiergate,
1943,
from the
such
mill
and 1918
ber
Texas,
1917
$322,334.
oper-
proceeded
total
to
Petitioner’s excess
and thereafter
profits
year
many year.
net
income
its
calendar
the mill for
ate
1941,
any specific exemption,
19, 1942,
of
and
exclusive
stockholders
On Dec.
$302,077.30.
adopted
carrying
corporation
was
After
reso-
back
directors of the
profits
liquidation,
providing
its unused
excess
credit for 1943
for its
lutions
1941, therefore,
authorizing
to
It
would have remain-
dissolution.
eventual
ing $20,257.30
carry-back
$1,030,-
liquidating
of
to
of
made
distribution
apply
against
22, 1942,
aas
credit
its 1942
into 1943 to-
excess
on
carried
000 Dec.
profits
$900,000
net
income. For
calendar
made an-
than
of more
tal assets
year 1944,
prof-
$270,000
liquidating
Petitioner
had
excess
distribution of
other
Again
stipulated
31,
26,
1943,
April
its net
it was
income.
and on Dec.
petition-
$141,933.49
Tax
gross
and The
Court found that if
had
assets of
carry
er
entitled
back an
net worth
unused
into
Its
it carried
1944.
profits
by
excess
for the calendar
Dec.
credit
its balance sheet for
$133,814.63,
shown
$322,-
such
would total
and on December
was
31, 1944, $137,872.81.
334.60 and would constitute
unused
profits
peti-
by filing
excess
credit
has not
dissolved
the neces-
been
sary
tioner’s
calendar
1942.
dissolution with the
consent
Sec-
retary
Petitioner
of Texas.
contends
com-
of State
State
“adjusted
putation
profits
required
of its
excess
tax returns with the
It filed the
year 1942,
net
Internal
income”
en-
of
Revenue for
Collector
total
titled to deduct:
1944. Its 1943 return disclosed
(1)
$37,152.58,
The amount of its unused
of which
excess
of
income
remaining
capital assets,
profits
gain
credit
after
salaries
was
$22,903.80,
wages
and income and
of
prof-
(2)
of
taxes
The amount
its unused excess
value excess
of
declared
paid.
$1,974.80,
which were
its credit
income
gross
Respondent
showed
income
refused to allow either of
tax return for 1944
deductions,
$1,400.78,
these
and deductions
Tax Court has
by
accepted
sustained
were
Com-
These returns
refusal.
adjustments.
material
2
which had corporations tion was intended tial productive activity production throughout v. ‘peacetime years’. surely 3 Commissioner, set out Of. this profit excess during in Mesaba adopted quotation profits projected wartime which had been in active Congress 10 T. expense and obtain The Cliffs their permit a'corpora C. credit amendment war 1010; of the Federal the Wier Mining Corp. to cease all activities benefit a substan period “* * * case, only was n Investors would not interpretation F.2d 466. sioner, and unreasonable time revenue, revenue Cf. [4] Cir.,160 Cf. economy.’’ Camp O’Sullivan 2 Cir., F.2d 84. Corp. assist Wolters doing nothing. would 120 F.2d promote Rubber Co. v. Commis v. reconversion to diversion Hoey, Land Co. permit inflation, of Suck an National needless wartime Comm., peace- purposes 1943,6 prime petitioner be One canee- here.. January When On $1,- carry-back provision to take care was nearly assets worth
gan year, it had. just $100,000 ac such a where a situation 000,000,including more than large in earlier receivable, subject of which had made to liabilities counts years. begun. just years, little or later liquidation- had had made none corpora was fact fact It still in form was winding up, orderly liquidation on, tion, carrying avowedly engaged still in an incorporated, still operations for which it just hanging business instead of some, small, profits, en though still losses, profits, or even is not bringing liquidation. necessary orderly gaged in significance. can Nor any particular *4 corpora Having year going as a entered anything out of his make Commissioner tion, going continued liquidation prolonged suppositious year.7 that for the at least whole continuing express purpose to ac- for the first In the credits. cumulate of which the Commissioner The fact only much, 1942, place are allowable such so that before the end of credits makes hardly conceivable that years, it is no two had sold its mill go money corporation would into advised longer active sawmill a well just liquidation to obtain such signifi- prolong company to be without seems us Kingman, 6 Taxpayer’s sheet of 12-31- United balance States follows: F.2d - Assets. Cash: 1,781.67 ..................$ On Hand ................... 756,244.38 $758,026.05 In Banks .................. .......1.......... Accounts Receivable: 118,770.57 Lumber ..................... Less: $1,965.60 Reserve for Discounts .... 11,690.60 freight 9,725.00 $ Reserve Sales 107,079.97 13,678.31 ........ .......... Miscellaneous Accounts 6,339.66 ....... ........... Creditors Debit Balance 127,097.94 Other Assets: Supplies 16,705.30 Mill Prepaid .............. 524.35 Insurance Premiums ' Prepaid 116.99 Rail Rental .. Lease 3,100.00 Deposit Insurance ......... 20,446.64
$905,570.63 Liabilities. Payable: Accounts 14,584.84 Purchases, Expenses, etc.........$ For 14,701.20 Wages 116.36 ................... Unclaimed Accrued: 7,713.04 Security ................ Social Taxes 516,639.17 & Profits Federal Income Excess Taxes 524,539.94 Payroll 187.73 ...................... 539,241.14 Reserves: contingent 3,500.00 ....................... For liabilities purchases Employees 75.00 ........ Bond For Defense 3,615.00 compensation 40.00 For ................... Additional
$542,856.14 Net Worth. 362,714.49 . remanded and the cause is that merely curtail- when, by carry-back credits here- profitable for redetermination accordance no ing doing its activities and lay un- liquidation .with. it could without business Finally, not questioned to them. claim part Judge (concurring be, claimed, that the it could part). and dissenting in any advan- here with tax was entered I part opinion concur from purpose mind. For it is clear tage year 1943 and allows the not, liquidation could record that opinion which part dissent not, any advantage. did confer year 1944. denies the hand, other On the as to corpora- of the year At the end appears from balance sheet assets, namely, postwar tion had substantial 1943,8 had the end of refunds of excess tax in the sum progressed year’s to the end fact, In view of this its fail- any longer valid rea where there was liquidate entirely ure to within the dissolution, corpor delaying son for explained, pertinent 1943 is reason ation, though jure, not dissolved must *5 de liquidation through a continuation of purpose regarded for the claim to ex of its apparent. The case is made carry back facto 1944, de cess respect somewhat like our decision For it must remembered that dissolved. Kingman, Cir., 170 F. United v. States necessary in delay it is not dissolu Texas 408, 2d held :of where we that the existence complete winding tion until there has been a postwar for con- claims’ sufficient cause up. provide tax statutes Its contin opin- liquidation; and I tinuing am the corporate uance of existence three ion denial of that a th.e purpose enabling after dissolution of. to, the facts referred view of duty charged up with the those to settle between a conflict this case creates affairs. say, Strange Kingman while the case. liquid- wrong The decision of Tax Court was stresses the Commissioner wholly unnecessary, denying for 1943. It was 1944 was ation in developed right denying it for our attention but not for the fact was dispense gave. that it with the reason order is affirmed as situ- was called referred the 1944 but reversed as to. ation hereinabove 8 Taxpayer’s balance sheet 12-31- :as 43 is as follows: A ccotc ............................'.........................'.....§110,696.34 Cash Eeceivable 6.32 Accounts ................-............................. 31,230.83 Postwar Eefund Excess Profits Tax...........................
§141,933.49
Liabilities.
1,250.00
Payable
..............................................§
Accounts
Wages
76.80
..............................................
Unclaimed
Payable
1,974.80
L...............................
Income
(cid:127)
(cid:127)..
Federal
Payroll
195.97
..........................................
Accrued
Taxes
Eeserves:
Contingent
...........................§3,500.00
For
Liabilities
1,102.54
Storing
.................................
For
records
n ............
4,621.29
purchases
employees
18.75
Defense Bond
...
For
8,118.86
Net Worth
133,814.63
Corporation at 12-31-43.....
Worth
Net
Taylor
Co., Tex.Civ.App.,
Southwest Life Ins.
&
Commis
Oil
Co. v.
Cf.
Gas
.
sioner,
art.
47 F.2d