Volume 56 — Federal Reporter, Second Series

<p>1. The plaintiff is a corporation which filed its income and excess profits tax returns for the year 1917 on April 30, 1918, in accordance with the facts as it believed them to exist, reporting a tax thereon of $26,338.18. On April 29, 1918, plaintiff voluntarily paid said tax, without protest. In the income tax return plaintiff deducted the sum of $120,000 from its gross income for depreciation of certain of its property.</p> <p>2. The returns so made for 1917 were audited by the Commissioner of Internal Revenue, and as a result of said audit the Commissioner denied plaintiff the right to deduct the sum of $120,000 for depreciation of its property. On account of such denial the Commissioner assessed additional takes against plaintiff for the year 1917 in the amount of $27,653.71. The said additional taxes of $27,653.71 were paid in full, under protest, on July 13, 1923.</p> <p>3. On August 23, 1923, plaintiff filed a claim for refund of $27,653.71, “or such greater amount as is legally refundable,” which was disallowed by the Commissioner of Internal Revenue. The basis of this claim w'as that “the additional assessment of $27,-653.71 was arrived at by disallowing the depreciation sustained by the corporation upon its patents and contracts.”</p> <p>4. On March 8, 1924, suit was instituted in the Court of Claims of the United States by plaintiff against the United States of America for the recovery of the aforesaid $27,653.71, plus interest as° provided for by statute, the docket number of such proceeding being D-174. By virtue of a judgment rendered by the Court of Claims on June 6, 1927, 63 Ct. Cl. 597, plaintiff recovered from the United States of America the entire amount of the said assessment, to wit, $27,653.71, together with interest. The parties have stipulated that either party may refer to the findings of fact of the Court of Claims in said ease with the same force and effect as if they had been expressly included herein and made a part hereof.</p> <p>The judgment of the Court of Claims, referred to in the preceding paragraph, held improper the refusal of the Commissioner of Internal Revenue to allow any deduction for the property sought to be depreciated by the plaintiff, and established as a special finding of fact that the value at March 1, 1913, of the property sought to be depreciated, was $1,805,111.00, and its minimum life at March 1, 1913, was approximately nine and one-fourth years.</p> <p>5. During the year 1917 the plaintiff was the owner of certain contracts which this court found had a March 1, 1913, value of $1,805,111, and which at that time had a minimum life of approximately nine and one-fourth years. The depreciation sustained on these contracts in the year 1917 by the plaintiff, based on the aforesaid March 1, 1913, value of $1,805,111, as found by this court, was $195,147.14.</p> <p>6. The recovery of the refund of $27,653.71 under the judgment of the Court of Claims rendered on June 6, 1927, as aforesaid, resulted from 1917 gross income being reduced only $120,000 on account of depreciation. At no time has there been deducted from plaintiff’s 1917 gross income the additional depreciation sustained during that year in the sum of $75,147.14, which is the difference between the aforesaid deduction of $120,000 and the depreciation sustained as found by this court in the amount of $195,147.14.</p> <p>7. On January 26, 1923, within five years from the time the returns for the taxable year 1917 were due, the plaintiff executed and filed with the Commissioner of Internal Revenue a waiver of its right to have the taxes due from it for the taxable year 1917 determined, assessed, and collected, irrespective of any period of limitation, provided that a final assessment, if any, for the year 1917 was made before March 1, 1924.</p> <p>8. On March 27, 1925, the plaintiff filed with the collector of internal revenue for the Second district of New York, under authority of subdivision (e) of section 281 of the Revenue Act of 1924 (26 USCA § 1065 note), a claim for the refund of $19,981.75, paid as and for income and excess-profits taxes for the year 1917, which said claim was in addition to that of $27,653.71, referred to in finding 3 hereof. The said claim for the refund of $19,981.75 was rejected by the Commissioner of Internal Revenue on October 5, 1927. A copy of the claim for refund and a copy of the Commissioner’s letter of rejection are attached to the stipulation of the parties filed herein, marked Exhibits B and C, respectively, and are made part of these findings by-reference thereto. The claims for refund to which reference is made in these findings were the only claims filed by the plaintiff pertaining to the case.</p> <p>The parties have stipulated that, if the plaintiff is entitled to recovery in this cause on the issue of law, judgment should not exceed the sum of $19,920.06, plus interest as provided by statute. If the issue of law be decided adversely to plaintiff, its petition should be dismissed.</p>

Special Findings of Fact. 1. Plaintiff is a mutual life insurance company, organized and existing under the laws of the commonwealth of Massachusetts.

This suit is for the recovery of $19,995.44, with interest, representing overpayment of income and profits tax for 1917. Thera is no dispute as to the amount of the overpayment. The Commissioner of Internal Revenue in his final audit and determination decided the plaintiff had overpaid its 1917 tax in the amount of $32,634.89'.

There were two indictments; and they were consolidated and tried at the same time. The first contained but one count and charged a felony under section 1114 (b), supra; the second indictment contained twenty-two counts, of which counts 13 and 18 charged misdemeanors under section 146 (a), supra, and the other counts charged felonies under section 1114 (b), supra.