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92 C. Cls.

TAXES—Continued.

INCOME TAXES—Continued.
XXV. (25) Recovery is limited to amounts paid for which claim

for refund was filed within time limit, with interest

at 6% from dates when payments were made. Id.
XXVI. (26) Where applications of overassessments of income

taxes against taxpayer's husband to taxpayer's
deficiency were made more than two years prior to
the filing of claim for refund, it is held plaintiff is
not entitled to recover any amount on account of

these applications. Id.
XXVII. (27) Where plaintiff on January 2, 1920, sold all its busi-

ness and assets, part of the consideration of sale
being the assumption by purchaser of certain
taxes assessed against plaintiff for prior years, and
where said taxes were paid by purchaser in the
years 1921 and 1922; and where plaintiff's records
and returns were kept on a cash receipts and dis-
bursements basis; it is held the 1921 and 1922
payments of taxes were not taxable income to

plaintiff in 1920. Nunnally, 358.
XXVIII. (28) Where plaintiff, having filed suit in the United

States District Court against the Collector of
Internal Revenue for recovery of taxes paid for
the year 1920, alleging that the Commissioner's
statement of income for said year was erroneous
by reason of his understatement of the basis of
plaintiff's assets sold on January 2, 1920; and
where said suit was tried on stipulation and oral
testimony directed solely to the issue of the value
of the assets sold, and a special verdict was ren-
dered, and judgment entered for the plaintiff in
accordance with said verdict and a stipulation of
the parties as to the amount due; it is held that
the plaintiff is not precluded by reason of the judg-
ment against the Collector in the District Court
from recovery in the instant case of a refund of
1920 taxes based on issues not involved in the

prior case. Id.
XXIX. (29) A judgment against a collector is not res judicata

against the Commissioner or the United States.
Doctrine of stare decisis applied under Bankers
Pocahontas Coal Co. v. Burnet, 287 U. S. 308, 312,
following Graham & Foster v. Goodcell, 282 U. S.
409, 430, and Sage v. United States, 250 U. S. 33.
See also Tait v. Western Maryland Railway Co.;
Sunshine Anthracite Coal Co. v. Adkins, 310 U. S.
381, 402, 403. Id.

92 C. CIS.

TAXES—Continued.

INCOME TAXES—Continued.
XXX. (30) Where the Board of Directors of a National Bank

at the request of the national bank examiner on
June 27, 1934, adopted a resolution authorizing
the charge-off of certain assets required to be
charged off by said examiner, and where in accord-
ance with instructions from the said bank exam-
iner said assets were not charged off until a read-
justment of the bank's capital structure was
effected and where in accordance with instructions
from the comptroller of the currency the said
assets were accordingly charged off in March
1935, it is held that plaintiff (national bank) is not
entitled to a deduction from gross income for 1934
for said assets as bad debts under the provisions
of section 23 (k) of the Revenue Act of 1934
which provides for the allowance of a deduction
for "debts ascertained to be worthless and charged
off within the taxable year.” First National

Bank, 426.
XXXI. (31) Bank assets are conclusively presumed, for income

tax purposes, to be worthless, within the meaning
of the statute, when ordered to be charged off by
the Federal banking authorities, in accordance

with the regulations of the Commissioner. Id.
XXXII. (32) Where assets, ascertained to be worthless by reason

of the bank examiner's order to charge off said
assets are still carried on the bank's books as
assets and are reflected in its surplus, said assets
cannot be considered to have been "charged

off.” Id.
XXXIII. (33) The two conditions precedent for the allowance of a

bad-debt deduction are (1) the determination of
worthlessness, and (2) a charge-off within the
taxable year.

Id.
XXXIV. (34) Where taxpayer consented to the assessment and

collection of a deficiency in tax for the year 1929
and accepted as correct an overassessment for the
year 1930, and where later the Commissioner
informed taxpayer in writing that a portion of the
overassessment for 1930 would be applied against
the deficiency for 1929, and the balance would
be withheld pending the determination of tax-
payer's liability for prior years, and thereupon a
certificate of overassessment was issued; it is held
that an account stated resulted. Otis Elevator
Co., 590.

92 C. Cls.

TAXES—Continued.

INCOME TAXES—Continued.
XXXV. (35) Where an account has been stated under a mutual

misapprehension as to the facts, the contract im-
plied therefrom is voidable by either party thereto,
and where so voided suit cannot be maintained

upon it. Id.
XXXVI. (36) Where under the British law, taxes paid by the

British subsidiary of plaintiff were levied upon the
subsidiary corporation paying dividends and not
upon the stockholder receiving the dividends, it is
held, under Biddle v. Commissioner, 302 U. S.
573, that taxpayer was not entitled either to a
credit or a reduction of said foreign taxes paid by

its wholly owned subsidiary. Id.
XXXVII. (37) In suits for the refund of taxes erroneously exacted

there can be no recovery if it appears that in fact
taxes have not been overpaid. Lewis v. Reynolds,

284 U. S. 281, cited. Id.
XXXVIII. (38) Where taxes have actually been refunded, the

Government may sue and recover if it later de-

velops that the refund has been in error. Id.
XXXIX. (39) Where before a refund of taxes has been made it is

discovered that the taxes have in fact not been

overpaid, no refund will be required. Id.
CAPITAL STOCK AND EXCESS PROFITS TAXES.
XL. (1) It is held that the provisions of sections 215 and 216

of the National Industrial Recovery Act, imposing
interrelated taxes on domestic corporations, are
constitutional, following the decisions in Allied
Agents, Inc. v. United States, 88 C. Cls. 315; 308
U. S. 561; and Haggar Company v. Helvering, 308

U. S. 389. Servel, Inc., 159.
XLI. (2) There is nothing arbitrary in requiring the cor-

poration taxpayer to declare a value upon which
it was willing to pay a tax and which it was
willing to use as a basis in computing an excess-

profits tax. Id.
XLII. (3) Congress possessed authority to lay an excise-

capital-stock tax and to impose an excess-profits
(income) tax on net income in excess of certain

credits. Id.
XLIII. (4) There was nothing arbitrary or capricious in the

constitutional sense in the action of Congress in
choosing to prescribe as the measure of the
capital-stock-tax and the excess-profits-tax credit
of each taxpayer the value of the capital stock &s
declared by the taxpayer for the first taxable

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92 C. Cls.

TAXES—Continued.
CAPITAL STOCK AND EXCESS PROFITS Taxes-Continued.

year under the statute; no one was better qualified
to place an estimate upon the value of the stock
than the taxpayer itself, and there was nothing
prejudicial to such taxpayer nor to others in so

providing in the statute. Id.
XLIV. (5) Where the tax is imposed for the year after that in

which the declaration of capital stock value is
made, it is held that the taxpayer is not required
to "guess' at anything, and there is nothing
unconstitutional in the requirement that the
valuation declared for the first taxable year under

the statute cannot be changed. Id.
XLV. (6) The value of stock in a going and operating concern

is always based largely on an estimate of the
amount of profit which it will make in future

years. Id.

XLVI. (7) The intent of the statute levying the capital-stock

tax was that a fair valuation of the capital stock
should be stated, and the capital-stock-tax
statute was purposely so framed in connection with
the excess-profit-tax statute as to encourage the
statement of a fair value and to tend to make it
unprofitable to avoid taxation; the statutory pro-
visions enacted for this purpose were just and fair
and not arbitrary nor unreasonable. Allied Agents

v. United States, 88 C. Cls. 315. Id.
XLVII. (8) It is impossible to adjust many taxes so that they

will apply with uniformity to each and every

taxpayer. Id.
XLVIII. (9) Where the N. I. R. A. Act under which the capital-

stock tax was first levied was adopted on June 16,
1933, and the first taxable year for which the
capital-stock tax was imposed was the entire year
ending June 30, 1933, and where the Revenue
Act of 1934 was adopted on May 10, 1934, and the
first taxable year for which the capital-stock tax
was imposed thereunder was the entire year
ending June 30, 1934; it is held that the tax was
measured not in accordance with the length of
time that the corporation taxpayer was in business,
but according to the value of its capital stock;
there was nothing retroactive in this provision
and it was not so arbitrary or discriminatory as to
make it unconstitutional. Id.

92 C. Cls.

TAXES Continued.

CAPITAL STOCK AND EXCESS PROFITS TAXES—Continued.
XLIX. (10) Following the decision in Servel, Inc. v. United States,

United Motors Service, Incorporated v. United States,
and General Motors Corporation v. United States,
ante, p. 159, it is held that the statutory provisions
are constitutional which require that when the
corporation taxpayer has declared the value of its
capital stock, pursuant to section 701 of the Rev-
enue Act of 1934, such value must be used as the
basis of excess-profits taxes for a subsequent year,
notwithstanding it is established that the actual
value of the corporation's capital stock was greatly
in excess of the amount declared. See also Haggar
Company v. Helvering, 308 U. S. 389; Allied
Agents, Inc. v. United States, 88 C. Cls. 315; 308

U. S. 561. Chicago Telephone Supply Co., 167.
L. (11) The capital-stock tax and the excess-profits tax are

so interrelated that they cannot be properly con-

sidered separately. Id.
LI. (12) Under the statute levying the capital-stock tax, the

"value" as used in subsection (f) of section 701,
Revenue Act of 1934, is the “declared value” of
the capital stock, which need not conform to the

"actual value of the capital of the corporation. Id.
LII. (13) Where in the instant case the declared value of the

corporation's capital stock as of June 30, 1934, was
$430,000 and the adjusted declared value as of
June 30, 1935, was $509,980.79 and where plain-
tiff now asserts that the actual value of its capital
stock at all times during the years 1934 and 1935
was in excess of $1,310,000, it is held that such a
gross discrepancy shows clearly that plaintiff was
making no effort to declare the true value of its
capital stock but on the contrary was making an
effort to avoid being taxed in the manner intended
by the statute; it is not a valid objection to the
statute that it is so framed as to counteract in

some degree efforts of this kind. Id.
LIII. (14) Where plaintiff, a corporation contemplating disso-

lution, on July 29, 1936, requested an extension of
time for filing its capital-stock-tax return, due to
be filed on July 30, and where said corporation on
July 30 made a payment of $30,000 on account of
said tax liability, and where said extension of time
for filing its return was duly granted, stipulating

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