CTA Case No. 1952 (Decision)

1n�r�� ., tr ~ ... 1� -: �::�.J P:-1. s c u:~': I : r~� .. ~ ~ !~. .: �ALS QlJ EZO:'-l Cl TY etitic er. C.T., � � 1952 t" . I ic -------X of In X- - .;> I C his h ;;> r f r nc_ t. th cision of the Com- i of Int n 1 v nu- a s in g, in .t an in r n titi ino uti rr on � n � th of . - � 0a ici DC' inco. rt y l J7 , 195 � 195 n 1 ... 2 . cc. u f 1: f.. 57 t s t n���������� d: 0 of r 1 t e. l. 20 ,40 � 0 �� 21.34 ( 949 .3 ) 2. ������� ��� ������ ��� �� ������ �� � � �� � ������� ���������� ���� rg � � � � � � � � � � � � to - L. - 2 � c. 72 ot 1 a n u e ������ ������

:OEC � IO - CTA CAo O. 1952 - 2- 90- - 25057-69/58 t income p r return � � � � � � � � � � � 71, 111 . 96 Add: Additi nal inco e : 500 . 00 17, 518 . 40 Gain on sale of real estat~ 57 , 06 . 75 L s moQnt declared in the r turn �������� 28 534 . 87 et income per fin 1 inv stig tion � � � � ss: Personal exemption � � � � � ���� ount subject t ta � � � � � � � � � � � x du th reon � � � � � � � � � � � � � � ss amount alrea y assessed � � � � � � � 1 nc ������������ � Add: 50/ ~urch rge � � � � � � � � � � � � ~I mo . int . fr n 6-20-59 t 6 - 20- 62 � Compromis for viol tion of Sec . 72 of the T x Code � � � � � � � � � � � � � � OT L U~T DUE D CO C I ����� 90- R- 319231- 69(59 et income p r return � � � � � � � � � � � 18, 161 . 70 � dd : Undeclared 50~ g in on sal of nd luyong - s n F lip 70, 789 . 82 88, 951 . 52 ri prop rty � � � � � � 3, 009 . 42 3 ooo . oo Und cl r d profit on s le 85 , 951 �.52 of Cristob 1 prop rty �� 67 700. 30, 137 . 00 et inco r final investigation � � � � 2, 319 . 00 Less: P rson l ex ption � � � � � ���� 27 , 61 . oo ount subject to t x � � � � � � � � � � 13, 909 . 00 5, 007 . 24 ax du th r o � � � � � � � � � � � � � 500 . 00 ess amount lready assessed � � � � � � � p 47, 234 . 24 B 1 nce � � � � � � � � � � � � � � dd: 50~ urch rg ����������� ~'Y mo . int . fr m 4-19-60 to 4-19- 3 � Compromis fo r violation of S c . 72 of th T x Code � � � � � � � � � � � � TOT L A U 'T DU & CO~ t , C I I:, � � � � � � ... .. ~<V

� 1952 3 �������� 1 , 509 . 9 1 of � � � � 21, 237 . 1 , 1 7. 7 � Sl ���� ��������� ���������� � � � � � � � �� ������� �������� ���� ��� � � � �� �� to 4- 17- 6 � c . 72 of c � LL� � � r� � � � � � � � � � � � I � � i;)ometimc i th l tt r P rt of 1960, res n- de t Co issi n r 0 lnt rn 1 ev nu , through one of is r ven e in r , c u d to b in e ig t .., 1d Lin rr z I � incorn t X 1.. bility for th yr 8 rio year � U �On in e tig ti n of hi turn , it s foun th t for th y r 1 56 . to 195 inclu v � h d cl r d in hL.. tX r t urn cnly fi �ty (50) rc nt o th d riv d �rom th s 1 of .is r pro in t 100'7:: , h pro e ld y h 'n or in ry ts . ( � 12 0 16 , - l r ~c . ) n th b of p tition r � Z,) cl r io 0 only 50 g in or ro- f i s a riv from 1 of hi r 1 r� erti , r Com.i c Int rn 1 venu on bru ry , 19 2, nt 1 t r to p t i ticn r

� D C IO CT CASE ~ � 1952 - 4- finding him liabl to , and demandin payment of, th tot 1 amount of 30, 303 . 18 r pre enting d - fici ncy income t xes du for th ye rs 1956, 1957 and 1958 . (Exh . 2, pp. 17-19, Vol . I , IR rec . ) Subsequently, on July 17, 1962, tel gram w s . sent to petitioner whdch sought to find out whether or not th taxes ssessed and demanded against him for the y ars in question w re al- r ady p id; and if not, the collection th reef shall be enforced through the summary rem dies provided by 1 w. (Exh . 3, p . 20 , Vol . I , BIR rec.) Consequently, on ugust 27 , 1962, petitioner Lino Guti rrez requested for a reconsider tion of the ass ssment for said y ars 1956, 1957 and 1958 asserting the round th t hi s les of his pro- perties are s�les of c pital assets, and h nc hi declaration of 50% of the gain realiz d in th �sales th reof �is correct . ( xhs . F and 4, pp . 21 to 26, Vol . I , Bl rec . ) In reply thereto, res- pendent in his 1 tter dated Octob~r 18, 1962 , re- qu st d p titioner to Y cute a w iver of the statute of limitations in rder to give the for- m r a pl time to act on the latt r ' s request, otherwis , petitioner ' s f ilure to d so ill b deemed abandon ent of his r u st for recon ide-

D ..CI o. 1 52 - s- r tion n ill c un th im. i t coll-ction of th afor 1 li bilitie � (p. 27 , l . I , rec . ) n 'ov r 15. 1 62 ( � 2 -2S. , vo � , I r c . ) nd c mb r 27 , 1 ~2 (p . 32 , Vol. , l o le � r nt y re pond nt to tition r in !. th hi e est for r e- inv tig tion r vie will giv n u cour n r tion only u on sub i "'ion by hi of i i � of ich h giv n u to J nu ry 10. 1963. w thin ich t sub it tL s�. � On ruary � 1963. noth r l tter ( �xh. s. � 33 , Vol . I . l r c. ) a nt to titic r - taxp y r invitin tt io c 1 tt r th t ntil thi d t of ri i ng . th waiv r o th st t t o i - dt tion h v not: n uly cc , n r- turn tor. on nt. ich 1 tt r~ i u t nti lly X 1 not b X h� r u td r , duly fro

Dc �o. 1 52 c ~- 6 - X � ~ On rch l , 9 3, re � ro i d ... nt lett r to p 1 ion r ~ ti g fin ly ~ - or ) ti ion r � f 1 ur to s b i r 1uir w iv r of th tut of 11 itati ns, hr st o r.c noi r tion n on y titio er, n , th r for �, r d fo th ym nt of h ~u of 30, 303_.18, . s d f � ciency it c rn t x plu 5~ rc r e n � , m nthly in r t, ot r i ction t r wil ore by umm ry r i .. . ( xh. 6, 34, Vol , l r c.) h rtin nt portion of th 1 tt r 0 r arch 1 , 1- i u h r un er: X t r of, f r r cons�a lt is, th r at d f r th d t o t xp yer , re~ o dent C m- .i ion r o nt rn 1 v n fil cl im for tp 0 th id ici ncy inccm t or th y r 1~56 , 1 57 nd 1 5 in t su 0

I rfl � 1952 . - 7- 30. 303 . 18, in p ci roc e in o . - 832 ntit "I t t t rtate of on ino uti rrez , tl hich w n(ing re th Court 0 irst I s- tanc of .u ,. i y . { xh � c nd 12 , � 27 , Vol . II , r c .. ) On April 2 , 1 6 , n in�orm r nt 1 tt r to h Co 1 ion r o I t rn 1 ven e o n- . cing the 1 te Lino Gut rrez for ta v si n . ( 34, ol . � I ec.) s c ns �unnc th reo�, t ci 1 nve i tion Divi ion of t e Bur u of nt rn 1 v nu conduct d noth r inve tig ion of t inc m t X r t rns of the t x ay for 1957, l I 195 � l 60 nd 1 2 . On Jun 28 ,. 1965 , - f- t hor U' i tion into th c- � n a se ent iS"'U � a in t n d " n in fro p titioner on ino uti rr z . vOn � Inc. ( xh � n 8, 155-1'7, ol . II. It r ) th tot:. 1 oun of 170, 73 � , as d tici ncy inc m t X or the ye rs in u .3ti 10 , ircluoiv of 50 sur- charge nd ont1ly in�er rt � it iz d aS fo lo :. -64(57 ����������� ���������� �� �� �� � � i f ����� X ����������� � � � � � � � � � � �� � � � d ����� �� � � � � � � � � � � �� � � � � ���� �������� in to �� � � � �� � ������

� 0 ClSIOf cc �0. 1952 90- R-25057-64L5B ����������� �������� �� t1on �� . � � � � � � -X ~� �tions � � � � � tax � � � � � � � � � � � ����������� ��� dy ss s � �� � � � � ��� ����� ��� � �� � ����� �������� t rom 2 ���������� 1,823.40 l1 CT ������� 90- . . . . . . .� r r turn � � � � � t inccm 1� 1 .70 dd : (1) g & .;an � � � � ���� 1� � 3, 0 9, 2 n cristob (2) g in o � ri�t �� ���� 14 , 233.62 (3) re t ir..c m � ��� � � � 7 t'on � � � .e Jtions � � � � �� ����� � �� ��� � �� � �� �� �� sg: e~ d � � � � � � a1 nc �������������� dd: 50/ s rch rg � � � � � � � � � � � � nonthly int r st from 4-1'- 0 to 4-1~-63 � � � � � � � � L U T U� C L C I: � � � � � � 120, 587 , 0

.. NO . 1952 . - 9- 90- � � � � � � � � � � � � 12, 054.21 Pr 6. 6 9 .32 95 , 04 3, 500 ,00 9 , 750,0 �������� � � ��� ������ ��� �� � � � � � � � � � � � �� � � ss $3 d � � � � � � � �������� ������� ��� �� � �� �� �� � in re t r m 0 4- 18- 6 � � � � � � � � � L ' ����� -64/62 10. QC , 95 turn ���� � � � � � � � � C 1m' roperty: 21. 237 , 82 ����� �� �� �� �� � �� ���� �� ��� �� �� � dy .. ..,ess ������ � � � � � � � � � � ��� � � � � urchar , �� , � � � � � � � � � � �cnthly int r .. st rom 4-17-63 to 6-17-6 � � � � � � � � � 136 . 37 1 , 709 . 87 MU cl ������� \ f., J I

D C 10 C I. � 1952 - 10 - X y r� coun l , upon r cei t o� the ov il d prot t , nd r t d for r - inv igaticn, in 1 tt r dat d #U u t 9 , 1'65, on th gro n t1 ment ~ n t f ct nd i' c n r ry � ( h . � � 162 , Vol . 11 . r c.) nsub u nt l t r d ugu t 30, 1965, 0 c ml 10, 1 n � rch ' ) 1 ) ctiv ly, r ;;,pon r u td ion r cf ntern tha ta:x ay r iv r o t:h t�t of limit icn On rch � 26, 1966, t X y r execut d n in _finit iv r o th f n cf pr cri tion . ( h. 10, n . 1 2, v 1 . , 1 r c.) nt. u n r cei�t o t � i r , v du cour to t e t. r sult of thi inv ti_. ti n , r t wrot. iticn r , in h 1 tt r f Ju 19, 1 t 1- n tha only the ses. nt r th yc rs 1 59 , -1 60 nd 1962 sh 11 b ad_ th u j ct of ~h r ue t or r - inv sti ation, inv vin th .ounts o 120,587.04 , s. 7 . 04 nd 1 ,709 . 87 und r 90- -31923-6 /59 , 90- - - 3170 6-64/60 nd 90- 73 -6 /62, r~~ ectiv ly . ( � 274 , Vol . II , I r ec. )

o ..c1 I � l 52 CT C ""' - 11 - for th r nd nt r nd r d d ci i'--n on th .id rot st d nt for 1959, 1960 nd l 2, ft cr n_i t l tt r of Jun 9, 19 0 r s th ci ion on b for - s id r t ted , nt , t yer 11 d it thi Court it i ion for on July 22, l � In tt . il on r l ry_ 4 , 196 , r ng ther ling"' , that th . t � nor p ~ l b di .1 .., d on tt r und t t court did not cc Llir jurh.diction OV r th i mo ths t r , r p nd nt wrot tition r in l t er �t d u , 2 1:;~6 ( xh . 15 , p � 3 3 - 3 o. ol . Il , I r c . ) . r u tin th 1 tt r y th to l unto� 89 , _665 . 60 i- ci ncy i X , inclu ive th or rs 1957, 195b, 1959 nd 1 62 . id - . � 1~70 . ( :X � 1 - P� 0, Vol . 1, 1, ft r ,r t n thr e (3) y r l rcc. ) hd e s fr I t r cei t 0 h eci ion on titian r �s rote t , d ,Ut l t 4 '..J , �p it'on fil d n _nc p tition for r vi on U Uot 1 � 1 71, 11 ng th r in n a r � u hid i not 0c y in r g r in th or s i d ci ion 0 n � nt d Uo:ot 2~ , l 9 , r uiring I

c c. 1952 - 12 - p titio r t pay 89 , 665 . ~0 de ici ncy incorn , plu 50. rch r , fo t y r 19 7, 195 , 1' 59 n 1 62. h i u involv in t i c r foll or tition nt ry 30- , of r on nt d ci ion �rovi ed for rn 1 v nu u lie c 1 25; the right ev nu to c f r th y incom in u s i i m d n t i p itio h ugu~t 2 , 1~69 ses nt ith r r to h ir t i or it n r lleg d tha h by re Co 1 ion nt r. 1 venu on ry 1, 962 1 null void n notic 0 ny kin r c ived ti ic r . coun rth r le d th t a w ent for l 56, 1 57 �n 1958 c n n ver b fin 1, cut ry n p r an 3Dl ca e th tt r of r n n of Jun 19 , 196. , hich r c i e . by p t tJ.on r o n 22 , 196 � " rod c s 0 the cf �ct th n thi d ci ... ion o t e oti n �or c n.,i r ion i l

c � 52 - 13 - for nd in b lf of t X y r inc Guti rr z. �hich pe 1 d to this H nor bl Court it in th 30- y p riod re crib d by pu lie ct o . 1125 . 11 . 0 i ion to t'c on to Di. I i . ) { r. � concl e ha t :;1 t � tlon for r vi w h ving n 11 d on uly 22 , 1 6 � th � tt r for , 1 0 ti � nt Commi sion r On th ot r � nd, r s 0 of In rn l v nu con nd that th tition or r vi ile y n th ~o~c y r g1 m n- t ry ric re cri d un( r ub ct o. 1125. r u t t h. d pet�t~on f r r vi h vin b 1 file only on J ly 22 , 9 8, i ~1 mer t n fiv (5) y r rc h d t of r s on- d nt�.., 1 tt r d t � rc 18. 1963 which h con- i i l d ci~ion . I st r tcfor , th t ' r th r cor of c U.t u of nt r 1 ev nue. it on uary 1 , 62 that r onc1ent, ft r rout in ry i v t i t~on , on Lin uti rrez t fi t lett r s ing n e nding . fr tt e l tt th tot 1 of ici ncy i .co. t X rhy to 958 . ( p . 17-1 � Vol. I , . 1 r c.) 'h. oaid 1 tt r o a e d of ru ry 1, 1 62 , c ntr ry t he "'S rti n of p tition r �

D c � 1952 - 14 - coun 1 0 th ff ct h t it w s net r c iv d , w ctu ll r c iv d P~tition r , evi , nc d by hi 1 tt r t t d t A gu t 27. 1962, nh s �or r Vi w d r inv tig ti n of th 0 h- y r 195 t 95 � (pp. 21-26, Vol. 1, 1 r c . ) u on r c t b r ;;;~ 1~cnd t of t 1 ve 1 tter of tition r 0 _vi w r inv �ti tion, h lo t n t in ri ing twic " ir t , on c ' 1 62 . nd. cond, on r 15, 1962, r iti-on r, in O'Cl in , t ceo. li bl m I r f O;;;o 0 ivin9 th d 0 pr ~cri tio , to r h cc m li h d or i in fiv ( 5) d y r vi w nd r t th .i - .n � (p � 27 ut d n 2 ' Vol. , I r . n reply or .., c.) ctio n he n by p r. h � w con h; r on- nt c "' n ct nrnent y p i i n of hi r r inv ti ti n of or th ic l r 1y r 1 nd 195 � u n 1y, r ..:. U .n rv u on X 1 r- i ion t rc l� , 1963, in por is r q ot one r . r hi

, c c '-' � 1952 -1 " X s c n sil hen Co iun r of I t rn 1 ev n ct t in e 1 ec in i 1 tt r t y r t ut th ur au c lnt rn ill c to c. 1 ct t t , uch 's indic es t l fi .. ity 0 i C.l. ion. h for r� 0 d 1 tt r of s nd t s th t th r u t or r c i r tio h s b en and tt l s id in �the unt of 30, 303 . 18, plu urcharge , ill not b. id. it ill t b diet y n ore d by ry r m i . rcvi b , 1 w. i in ct deni l 0 u st f r VJ.ew nd r inv tl.g ticn of tl t. nd h tition r did n t thi i d cisio1 � h c m in l nd .cutory. Thi ir. in lin it th: rulin of th .:>U r '� � Court , cited by r B� n nt, in tt cas f Dy c Co ., Inc. v � court f X ls , t 1, � � o. -313 9, ctob r 1 , 1977, 79 442, t1US:

� 1952 - 16 - public ll of e - llo ~ t rms, ruling � of the Th t ~n Intern l rr investi ti n ow v r . ~n l 6 , a no r t of th de ici ncy inc t "'es f p titioner l 0 fer t y r lC 57 , n includin � th ye rs 1960 1 2, a c nduct d t t i�ns~.. nee of in- for nounc t .,.. t on in Gutierrez r ta ev si � (p . 34, Vol . l , 1. r c.) f- ter ore d ail d nd thorough inv tig th... . n t r 1 - t r of �s e ent nd d ! nd t d Jun 28 ., 1~6 s i�.;u . n �ent to tl e t X y r . hs. # Pr � 155 to 1 7, v 1~ II, r c . ) It u t b not d tr t this ss nt and td Jun 2B , 1.;6 �S hject 0 rot t ly c n 1 for p titio . er, p r l-1i lett .r te . ,gU;;.;. , 1~65 . (p . 162 , Vol. 1 f rec . ) nu nt Consia rin< .th b v rc e t , r /

7- \ r h X y rto cut t . r �i 1 iv r o t � t tu c li . it ti n. hil iting or i w 1 r, nd nt co . i si n r 0 nt r v. u n i w ote th t X y r , r ug c �ns 1, ub r 1 9, 1 5 ( � 3 � ol. � u th yn 0 u r via , on f' r th noun 0 1,338. 00, lu t t tory n lti. j d in st. n in f vor of r nd nt in th c t' o f .rj 1 t on Lin uti~rrez v � co 1 ct r (no � co issi n r} of n rn 1 v n # � � o .. L- ... 537 , nd th o ther for the mo nt 30,3 3. 1 , r pr ~entin d�fici ncy inc .e or r 19 6 , l 57 nd 1 5 , plu t tut ry 0 1t y n � hi n 'bj ct o f r s on I t � 5 cl im in s ci 1 roce in. � ~ 832, ntest te ;;>t t �.- of th 1 t on ino Guti r z, anc which th nna or o f - es .e , to y �h n t e up- i rr , pr i court ci e th c in f vor of r t co. is.,.icn-r of lnt rn 1 v nu in � � - l 537 . rch 2 , 1966, t X Y r X CU d in lly, on " n inde init v r 01: t tut 0 lir i ticn in ccor a c w th ction 332 of 'th tion 1

� c1 � 1952 cc -1 lnt rn nu 0 � ( xh . 10, upr . ) lmm - ly th r lr t1 n tKr u h in sti e inco1 t r y r in q . cor uc. ~ ult s h re � r 0 ... nt is 1 tt r f n 1 � 1968 in n e. n i g ro tl.ti ~ the of t t un 0 . 170, 730 . l , ~i c h re r s ~nt_ et ci ncy inc t x.s for th 'I r 1 7 t l:t60 l 62 . H rs Co i f. nt rn l vu tr ng Y r h d 1r y en n ru 1 , 962, for h_ y r 1 56 to n th t .a d hv bc n 1 , wr te io rd Jun 19, l 6, t in f ct t le nt or 1 56 , 1 57. ~ r r t cse i 1 1 icr r v lid n ing . orti ns 0� 5 id tt r i h r i hl II

� 1952 - 19 - he bo tt r f un l , 1 6 , r c 1 d by f p t on on Jun 22 , l 6 , w ~ no cont t d or t by c n for ti ion r . Inst ad, co i tl1 ci ion of r n- nt ion r o In r l v u , it ri h y d th to h cour 0' '! p al on .:; ly 22 , l 6 � 0 bru ,l 6 n t ~ il d hi n r to .e t.i ion r revi s rting th t t .i Court h no ju s 1 t ov t ' t c ~ nd t th s J.. e r th i I i~ c0 � .... 1 ,... 0 nr 1 ( ) nth to h ti i f r i nt, on ugu t , 1 ~ 69 ., n r om p i i n r fici r. cy c t in unt 0 inclu iv 0 �urch t nd in r t f .. hy 51 , 9 8, 195 ..- nd 2 . { . ..~ . :.r: ... 3 -3 0, I , 8 r c . ) it t e c ticn of t t ~nt cov rin y r 1957 .d

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o. 1952 - 21� - s � 2 � 1~7 � c ty, 0 c b uz I C .'C : .