Callahan Realty Corp. v. Commissioner

Memorandum Opinion

STERNHAGEN, Judge: The Commissioner determined a deficiency for 1935 of $2,683.94 in personal holding company surtax, and added a penalty of $670.99 for failure to file a return. Petitioner, which filed its income tax return in the Third District of New York, challenges the determination that it was a personal holding company. This turns upon the question whether $10,467 received by petitioner in the taxable year in the retirement of mortgage bonds which it held was a gain from the sale of securities within the meaning of the personal holding company definition of the Revenue Act of 1934, Section 351. The question has been decided in accordance with the taxpayer's contention first by the Board of Tax Appeals in ; then again in ; and then by the Circuit Court of Appeals for the Eighth Circuit in affirming the latter decision in ,*358 with one dissent. We follow those decisions and reverse the Commissioner's determination that the petitioner was a personal holding company. Since petitioner was not under a duty of filing a personal holding company return, its failure to do so does not support a penalty addition.

Decision will be entered for the petitioner.