be payable at such times and in such amounts as my trustees may deem advisable, the available assets of my estate shall warrant and when the requirements of the Semmes Motor Company have been provided

for

Within the statutory period and according to the manner in such cases provided, M. Gertrude Semmes, the widow, elected to take under the will in lieu of the interest allowed her in decedent's estate by the laws of the District of Columbia.

During the year 1928, the year involved in this proceeding, the trustees, pursuant to the authority contained in paragraph (4) of decedent's will, distributed cash to the widow in amounts aggregating $12,000.00, which amounts, added to payments of prior years, did not aggregate a sum equal to that which would have been apportionable to her as of the date of deceased's death under the controlling District of Columbia statutory provisions had she not elected to take under the will.

The monthly payments provided for under paragraph 4-a-b-c-d of the will were regularly made by the trustees, deducted on petitioners' return, and allowed as deductions by the respondent. No distributions were made by the petitioners during the year 1928 in connection with the bequests aggregating $55,000.00, referred to in paragraph 4 (e) of the will, and of which there still remained unpaid as of January 1, 1928, the sum of $44.000.00, payments aggregating $11,000.00 having been made in prior years subsequent to testator's death. The trustees filed a form 1040 income tax return for the year 1928, and reported taxable net income of $1,721.11, arrived at in substantially the following manner:

The petitioners computed the tax upon the net income of $1,721.11 and paid the tax which they estimated to be due. The respondent commissioner, in arriving at the deficiency for the year 1928, disallowed as a deduction in arriving at petitioners' net income the $12,000.00 representing distributions to the widow, and computed the deficiency upon a net income of $13,721.11 in lieu of the $1,721.11 returned by the petitioners. Mrs. M. Gertrude Semmes, the widow, when filing her income tax return for the year 1928 reported the $12,000.00 distributed to her as being taxable income; thereafter she was advised and learned that said amount was not properly taxable to her and accordingly filed a claim for refund, which was thereafter allowed by the Commissioner, and refund made to her of the taxes paid by her for the year 1928 on this amount.

We have consistently held, beginning with the case of Julia Butterworth et al., Trustees, 23 B. T. A. 838, that amounts paid in accordance with a will to a widow in lieu of dower are payments to her. in satisfaction of her dower rights, and, where the total of the amounts so paid do not equal the value of her dower rights, they are not deductible by the trustees of the estate, since they do not constitute distributions of income within the meaning of section 219 (b) (2) of the Revenue Act of 1924. The same result was reached under section 219 (b) (2) of the Revenue Act of 1926, and under section 162 (b) of the Revenue Act of 1928, which is controlling here. (Fidelity-Philadelphia Trust Co., Trustee, 25 B. T. A. 1359; Boston Safe Deposit & Trust Co. et al., Executors, 26 B. T. A. 486; Anthracite Trust Co. et al., Trustees, 26 B. T. A. 89).

Petitioners' counsel does not contend that these cases are not controlling in the instant proceeding, but he contends, in the alternative, in the petition and in the brief that although this $12,000 paid to the widow was in lieu of dower, it is nevertheless deductible, since it was held and accumulated to pay the bequests provided for in paragraph 4 (e) of the will. Section 162 (b) and (c), Act of 1928.

In his brief, counsel also refers to various other provisions in the will which are set forth in the stipulation, but which we have not included in our facts, to show that the trustees were not allowed any discretion to withhold or pay said bequests and that such amounts were, therefore, taxable to the beneficiaries and deductible by the trustees.

We see no merit whatsoever in the petitioner's contentions. The amount of $12,000 was paid to the widow and it can not be paid to her and at the same time be accumulated to pay other bequests. Such a thing is physically impossible. The fact that it is not deductible under the law does not change the physical fact of its having been paid to her. There is no question raised as to the $1,721.11 which remained as income to the trustees and which was not distributed or credited in any way to the beneficiaries. We do not see any necessity of going into a discussion of the construction of the will or the discretion of the trustees. Clearly, they had to pay the $12,000 to the widow, and did so. After paying this amount, necessary expenses and other distributions provided for in paragraphs 4 (a), (b), (c) and (d) of the will, they did not have enough left to pay any of the amounts provided for in paragraph 4 (e). There is no basis for holding that the amount of $12,000 was accumulated for further distribution to pay the bequests provided for in the latter paragraph.

Judgment will be entered for the respondent.

WELLS-ELKHORN COAL COMPANY, PETITIONER, V. COMMISSIONER OF INTERNAL Revenue, RESPONDENT.

Docket No. 44786. Promulgated November 30, 1932.

Waiver signed by a former president of a dissolved Kentucky corporation, who likewise became president of the successor corporation, held valid to extend the statutory period for assessment against such dissolved corporation.

Chester A. Bennett, Esq., for the petitioner.

B. U. Steele, Esq., for the respondent.

This proceeding involves the liability of the petitioner as transferee of the Black Diamond Coal Company on account of income and profits taxes determined against the latter company for the calendar year 1919 and the period September 25 to December 31, 1920, in the respective amounts of $6,219.21 and $2,789.12.

FINDINGS OF FACT.

The Black Diamond Coal Company, hereinafter sometimes referred to in this proceeding as transferor, was organized under the laws of Kentucky in 1915. It was the owner of a lease on approximately 100 acres of coal land in Floyd County, Kentucky, which it operated until the latter part of 1920, when it discontinued business. At that time it had outstanding 900 shares of common capital stock of a par value of $100 per share, and had assets as follows: The lease on 100 acres of coal land referred to above, 40 or 50 acres of which had been mined out; railroad siding and about 25 or 30 mining cars; a small coal tipple or dump; and 12 small miners' houses. The value of the foregoing assets at the time of receipt by the petitioner, as shown below, was in excess of the amounts now sought to be collected from the petitioner as transferee under the provisions of section 280 of the Revenue Act of 1926.

The petitioner was organized in or about 1919 under the laws of Kentucky. At the time of its organization it was desired to acquire the properties of the Black Diamond Coal Company, which would be operated along with other properties of the petitioner. The petitioner first sought to acquire the properties of the Black Diamond Coal Company through the issuance of its preferred stock therefor. but certain stockholders would not agree to such a transaction. What the petitioner did therefore was to issue 750 shares of its preferred stock to stockholders of the Black Diamond Coal Company, who were willing to accept such stock in payment for stock of the Black Diamond Coal Company of a like par value, and to acquire

the remaining 150 shares by the payment of cash to the holders of such stock in the amount of $31,750. When the foregoing stock was acquired the petitioner had outstanding common stock of a par value of $300,000 and preferred stock of a par value of $135,000. After the stock of the Black Diamond Coal Company had been acquired by the petitioner, its assets were transferred to the petitioner on October 20, 1920, in accordance with a resolution of the stockholders adopted on that day and ratified at the same time by the board of directors. A material part of the resolution reads as follows:

Thereupon the President announced that all the stock of this Company was owned by, and stood in the name of, the Wells-Elkhorn Coal Company, except the three shares standing in the name of each director, and that as to such shares, the same had been assigned by each and all of said directors to said Wells-Elkhorn Coal Company, though without being so transferred upon the record, and that they wish to lay before the meeting the matter of further continuing the corporate existence of this Company. Whereupon, on full consideration whereof, and on motion duly made and seconded, it was, by the vote of all the stockholders,

UNANIMOUSLY RESOLVED, That the Wells-Elkhorn Coal Company being the equitable owner of all the stock of this Company, it is not necessary to further continue the corporate existence of the Company; and,

RESOLVED, FURTHER, That the executive officers of this Company be, and they are hereby, authorized and directed to assign, set over, transfer and deliver to the said Wells-Elkhorn Coal Company all property of whatsoever kind or nature owned by this Company, real, personal or mixed, cash, accounts, bills receivable, books, office furniture and fixtures, and all other property it may own, or in which it has an interest, in consideration of the said Wells-Elkhorn Coal Company assuming to pay, and actually paying, all the debts and obligations of said Black Diamond Coal Company, and keeping and performing all the covenants and agreements to be by said Black Diamond Coal Company kept and performed.

RESOLVED, FURTHER, That pursuant to the consent in writing of the owners of the entire issued and outstanding capital stock of the Company, for this Company to close up its business and wind up its affairs and dissolve, original of which consent will be found at page 47 of this minute book, the proper officers of this Company be, and they are hereby, authorized and directed to take appropriate steps authorized by Sec. 561, Kentucky Statutes, to close up the business of the Company, wind up its affairs and dissolve.

An agreement in conformity with the above resolution was signed by both parties.

After proper notice by publication as required by the statutes of Kentucky, the Black Diamond Coal Company was dissolved on or about November 24, 1920. At the time of its dissolution, John E. Buckingham was president of the Black Diamond Coal Company, and he also became president of the Wells-Elkhorn Coal Company (the petitioner) and has continued in such capacity. No meeting of the board of directors of the Black Diamond Coal Company was held after its dissolution.

The Black Diamond Coal Company filed income and profits tax returns for 1919 and 1920 on March 6, 1920, and March 15, 1921, respectively, which were signed by John E. Buckingham, as president. On or before January 5, 1925, the following waiver was filed with the Commissioner:

In pursuance of the provisions of existing Internal Revenue Laws Black Diamond Coal Company, a taxpayer of Ashland, Kentucky, and the Commissioner of Internal Revenue hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year 1919 under existing revenue acts, or under prior revenue acts. This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1925, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal 18 filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.

On November 19, 1925, the respondent issued a deficiency notice to the Black Diamond Coal Company, setting out deficiencies for 1919 and 1920. Within the sixty-day period allowed by such notice the Black Diamond Coal Company filed a petition with the Board, appealing from the foregoing deficiencies. The petition was verified by John E. Buckingham as president of the Black Diamond Coal Company. On May 4, 1928, the Board, pursuant to a stipulation executed and filed by the parties to the proceeding, entered the following order of redetermination:

This proceeding having been called from the Day Calendar of May 2, 1928, and counsel for the parties having filed a stipulation stating the amount of the deficiency due from this petitioner, it is hereby

ORDERED AND DECIDED that there is a deficiency for the year 1919 in the amount of $6,219.21; for the period from September 25 to December 31, 1920, in the amount of $2,789.12, and that there is no deficiency for the period from January 1 to September 24, 1920.

No appeal was taken from the above order and the said order has not been modified, vacated, or set aside, and is still in full force and effect. The foregoing deficiencies were duly assessed against the Black Diamond Coal Company on May 26, 1928, and warrants of distraint were issued, but the Commissioner was unable to collect all or any part of the same. After the foregoing actions had been taken, the Commissioner on April 4, 1929, gave notice to the petitioner of its