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RANDOLPH PRODS. CO. v. MANNING
May 12, 1948
RANDOLPH PRODUCTS CO.
The opinion of the court was delivered by: SMITH
This is a civil action under the Internal Revenue Code for the recovery of the surtax and the statutory interest thereon, paid by the plaintiff for the calendar years 1943 and 1944, which the plaintiff alleges were erroneously and illegally assessed and collected. The action is before the Court at this time on a motion for summary judgment filed by the plaintiff pursuant to Rule 56 of the Rules of Civil Procedure, 28 U.S.C.A. The essential facts are not in dispute, and the only issue raised is one of law.
I. The plaintiff, a corporation organized under the laws of the State of New Jersey, was the owner of a factory building which was let to Wendell G. Randolph and Altje H. Randolph, his wife, who were general partners. The said Wendell G. Randolph was the owner of ninety-four per cent of the common stock of the plaintiff. The gross income of the plaintiff for the calendar years 1943 and 1944 was derived solely from rent paid to it by the partners for the use and occupancy of the factory building.
II. The plaintiff filed with the defendant its corporate income tax return for the calendar year 1943 (Corporation Income and Declared Value Excess-Profits Tax Return), and paid the income and declared value excess-profits taxes therein reported. The plaintiff filed a similar return for the calendar year 1944 and paid the taxes therein reported. These returns disclosed no surtax liability under the pertinent provisions of the Code, hereinafter quoted.
III. Thereafter the plaintiff filed with the defendant a delinquent return for the calendar year 1943 (Return of Personal Holding Company), in which it reported 'personal holding company income' and a surtax liability thereon in the amount of $ 3,017.06. The plaintiff filed a similar return for the calendar year 1944 in which it reported 'personal holding company income' and a surtax liability thereon in the amount of $ 3,071.35. Thereafter the plaintiff filed with the defendant an amended return for each of the said years in which it disclaimed liability as a personal holding company.
IV. Pursuant to the provisions of the Code the Commissioner of Internal Revenue, having determined a deficiency for each of the said years, assessed the following surtax:
Year Tax Interest Penalty Total
1943 $ 3,017.06 $ 241.36 $ 754.27 $ 4,012.69
1944 3,071.35 61.43 614.27 3,747.05
Totals $ 6,088.41 $ 302.79 $ 1,368.54 $ 7,759.74
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