North American Oil
Consolidated v. Burnet case brief
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286 U.S. 417, 52 S. Ct.
613, 76 L. Ed. 1197, 1932 U.S.
CASE SYNOPSIS: Certiorari
was granted to the United States Circuit Court of Appeals for the
Ninth Circuit to review that court's judgment reversing a decision of
the Board of Tax Appeals as to the year in which income earned by a
property operated by a receiver was taxable to the
corporation.
FACTS: A corporation became liable for income tax on disputed property in the year when the receiver paid the earnings to the corporation. During a controversy over ownership of oil-producing land, a receiver was appointed to manage the property and to hold the earnings. Petitioner did not pay taxes on those earnings until after the receivership was dissolved, and the earnings were paid to petitioner. Petitioner then filed an amended return seeking to apply the payment to the tax year in which the money was actually earned. The Board of Tax Appeals ruled for petitioner, and the appellate court reversed. The U.S. Supreme Court affirmed the appellate court's determination that the income was taxable in the year that petitioner actually received it. The receiver was not required to file a tax return because such an obligation was imposed under § 13(c) of the Revenue Act of 1916 only where a receiver controlled all properties of a corporation. Because petitioner had no right to demand payment from the receiver and might never have obtained the income, no constructive receipt of profits occurred in the year before payment was made to petitioner.
CONCLUSION: The court affirmed because petitioner was not entitled to receive the earnings from the disputed property until the receivership was dissolved and, thus, could not be taxed on the income until that date.
FACTS: A corporation became liable for income tax on disputed property in the year when the receiver paid the earnings to the corporation. During a controversy over ownership of oil-producing land, a receiver was appointed to manage the property and to hold the earnings. Petitioner did not pay taxes on those earnings until after the receivership was dissolved, and the earnings were paid to petitioner. Petitioner then filed an amended return seeking to apply the payment to the tax year in which the money was actually earned. The Board of Tax Appeals ruled for petitioner, and the appellate court reversed. The U.S. Supreme Court affirmed the appellate court's determination that the income was taxable in the year that petitioner actually received it. The receiver was not required to file a tax return because such an obligation was imposed under § 13(c) of the Revenue Act of 1916 only where a receiver controlled all properties of a corporation. Because petitioner had no right to demand payment from the receiver and might never have obtained the income, no constructive receipt of profits occurred in the year before payment was made to petitioner.
CONCLUSION: The court affirmed because petitioner was not entitled to receive the earnings from the disputed property until the receivership was dissolved and, thus, could not be taxed on the income until that date.
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