The opinion of the court was delivered by: BARD
This is an action by Edward Lowber Stokes to recover $ 37,706.41, representing an allegedly excessive income tax paid by plaintiff for the calendar year 1936 and an assessment for the same calendar year made by the Commissioner of Internal Revenue together with interest from the dates of payment.
I make the following special
1. For the calendar year 1936 plaintiff paid to defendant in quarterly installments amounts totalling $ 44,004.67, representing individual income tax as reported and computed on his return for that year. Thereafter, on February 19, 1938, pursuant to an additional assessment by the Commissioner of Internal Revenue for the year 1936, plaintiff paid to defendant an alleged deficiency of $ 19,894.07, plus interest of $ 1060.11, or a total additional assessment of $ 20,954.18. On October 3, 1939, plaintiff received a refund in the principal amount of $ 501 together with interest of $ 26.70.
2. On March 9, 1940, plaintiff filed a timely claim for refund with defendant, which was rejected by the Commissioner of Internal Revenue on December 11, 1942.
3. From 1922 to November 4, 1931, plaintiff was a partner in the firm of Edward Lowber Stokes and Company, dealer in securities. On November 4, 1931, the partnership dissolved and thereafter plaintiff carried on the business individually and as sole proprietor under the same firm name.
4. Prior to 1936 the accounting practice of the partnership, followed by plaintiff as sole proprietor, had been to inventory at market prices all unsold securities carried in the investment or securities account and the income for tax purposes was computed on the basis of the inventory figures.
5. On December 18, 1936, plaintiff created a new account on his books designated 'Personal B' Account, and to it transferred from the company's securities account four issues of municipal bonds valued at original cost price. The cost and market values of these bonds were as follows:
Value at Value At
Par Value Cost 12/18/36 12/31/36
150,000 Allegheny Co. Pa. 2 3/4's 152,842.80 156,750.00 162,000.00
100,000 New York City 3 1/4's, 7/1/75 101,656.25 106,500.00 109,000.00
225,000 New York City 3 1/2's, 1/15/76 228,375.00 248,625.00 256,500.00
100,000 New York City 4's, 10/1/80 112,625.00 111,218.75 125,000.00
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