Palm Beach Trust Co. v. Commissioner of Internal Revenue

174 F.2d 527, 84 U.S. App. D.C. 410, 37 A.F.T.R. (P-H) 1478, 1949 U.S. App. LEXIS 4393

Opinion

PER CURIAM.

This is a petition for review of a decision of the Tax Court of the United States.¹ We think that court was right in its ruling upon petitioner’s liability for the personal holding company surtax. Its decision in that respect is affirmed upon the opinion of Judge Opper. In respect to the delinquency penalty, however, we disagree. Petitioner company was originally organized prior to the imposition of the personal holding company surtax, and it had an original business purpose quite apart from tax considerations. There was a question debatable in good faith concerning the application to it of the statutory exceptions. While those considerations do not bear upon its liability for the tax, they do bear upon liability for penalties.² The decision upon the penalties is, therefore, reversed.

Affirmed in part and reversed in part.

1 1947, Palm Beach Trust Co., 9 T.C. 3060.

2 Orient Investment & Finance Co. v. Commissioner of Internal Revenue, 1948, 83 U.S.App.D.O. 74, 366 F.2d 601, 3 L.R.A.2d 612, and eases there cited; Spies v. United States, 1943, 317 U.S. 492, 496, 63 S.Ct. 361, 87 L.Ed. 418.