Reporter's Statement of the Case Ford & Son, Inc. (Michigan), a similar reserve of $2,737,466.42. No similar reserve appeared on the books of Ford Motor Company (Delaware). After the merger of the three companies, a reserve for Federal income tax was set up on the books of Ford Motor Company (Delaware) in the sum of the two amounts theretofore appearing on the books of the other two companies, namely, $48,695,566.59. At May 1, 1920 (prior to the merger), Ford Motor Company (Delaware) had cash on hand of $23,077.10. The books of Ford Motor Company (Delaware) were opened May 1, 1920, by transferring thereon all of the accounts of the other two companies as they appeared on their books, except as to intercompany accounts, which were eliminated. IX. March 5, 1920, in a letter signed "Ford Motor Company" and addressed to the collector at Detroit, Michigan, an extension of 30 days was requested in which to file a consolidated return "for the period ended December 31, 1919", on account of the Ford Motor Company (Michigan), Ford Motor Company (Delaware), Henry Ford & Son, Inc. (Michigan), and other affiliated companies, and on the same day such extension was granted to the Ford Motor Company (Michigan), Ford Motor Company (Delaware), and Henry Ford & Son, Inc. (Michigan). X. April 15, 1920, a tentative return was filed with the collector at Detroit, Michigan, on form 1120, for the calendar year 1919, and such return was headed " Ford Motor Company (Consolidated Return), Highland Park, Detroit, Michigan." The name "Ford Motor Company was not followed by any description to show whether it was intended as the Michigan or Delaware corporation, and the names of the corporations to be included in such return (other than the Ford Motor Company) were not indicated. The estimated tax liability of $40,000,000 shown on that return was not assessed. On or about the same day, the Ford Motor Company (Michigan) delivered to the collector a check for $10,000,000 as payment of the first installment of the total estimated tax liability. XI. On or about April 15, 1920, the collector prepared a tentative return for the Ford Motor Company (Michigan) Reporter's Statement of the Case which showed an estimated tax liability of $19,740,018.24, but such amount was not assessed. At the same time the collector prepared a tentative return entitled "Ford & Son, Inc., Mich.", which showed an estimated tax liability of $600,000 but such tax was likewise not assessed. When the payment of $10,000,000 referred to in finding X was received, the collector allocated that amount as the first payment on the returns, as follows: "Ford Motor Company (consolidated return)" (tentative return filed in that name), $4,893,793.95; Ford Motor Company (Michigan) (tentative return prepared by the collector), $4,935,004.56; and Ford & Son, Inc., Michigan (tentative return prepared by the collector), $171,201.49. XII. May 29, 1920, the collector, in response to a request, granted an extension to the Ford Motor Company (unidentified as to whether the extension was intended for the "Michigan", "Delaware ", or both corporations) to July 15, 1920, to file its (completed) income-tax return for the calendar year 1919, such extension being conditioned upon a further payment by June 15, 1920, of the second installment of tax. June 15, 1920, payment was made to the collector of $10,000,000 by check of Ford Motor Company (Delaware). XIII. July 15, 1920, the Ford Motor Company (Michigan) filed its (completed) income- and profits-tax return with the collector, which showed a tax liability for the calendar year 1919 of $44,726,260.12. The return included the income and invested capital of such company for the entire year, and in order to determine the income and profits tax for the sixmonth period ended June 30, 1919, the company computed the total tax for the entire year and set forth on such return one-half of that amount as the tax for such period. The amount so indicated, namely, $22,363,130.06, was assessed against that company. XIV. July 15, 1920, the Ford Motor Company (Delaware) filed a consolidated income- and profits-tax return for itself and affiliated companies for the period July 1, 1919, to December 31, 1919, which showed a total tax liability of $22,176,382.82 for such period, and that amount was assessed against the Ford Motor Company (Delaware). The return showed Reporter's Statement of the Case a taxable net income of $55,824,854.44, which was summarized in schedules attached to the return as being attributed to affiliated companies, as follows: One-half taxable net income for calendar year 1919 of One-half taxable net income for calendar year 1919 of Net loss for six months ended December 31, 1919, of Total____ $57, 499, 979. 75 2,322, 195. 54 (3,040, 552, 32) 56, 781, 622. 97 Certain adjustments, brought about by the consolidation, with respect to depreciation, inventories, and sale of capital assets, reduced the foregoing total to a taxable net income of $55,824,854.44. XV. July 15, 1920, Henry Ford & Son, Inc. (Michigan), and certain affiliated companies, filed a consolidated income and profits tax return for the six-month period ended June 30, 1919, which showed a taxable net income for the entire calendar year 1919 of $4,644,391.07 and a tax liability for the entire year of $1,551,610. In order to arrive at the tax liability for the six-month period, one-half of the foregoing amount was computed as the tax liability for the six-month period ended June 30, 1919, namely, $775,805, and such amount was assessed against Henry Ford & Son, Inc. (Michigan), and affiliated companies. XVI. On or about July 23, 1920, the Ford Motor Company (Delaware) and affiliated companies filed with the collector a statement purporting to allocate the payments previously made and to show the deficiencies in tax on account of such installments and interest thereon. Such statement indicated a total deficiency due July 15, 1920, on account of such installments of $2,740,879.69, distributed as follows: July 15, 1920, the collector assessed the interest shown by the above tabulation against the companies so named, and on the same day the Ford Motor Company (Delaware) paid $2,740,879.69, representing the deficiencies in installments and interest thereon shown by such tabulation. XVII. September 15, 1920, the Ford Motor Company (Delaware) paid $11,328,829.47 as the third installment of tax due in connection with the assessments made for 1919 against the companies named in the tabulation shown in finding XVI, and such amount was credited by the collector in favor of the several companies as follows: Ford Motor Company (Michigan). Ford Motor Company (Delaware). Henry Ford & Son, Inc. (Michigan)_ Total $5, 590, 782. 52 5, 544, 095. 70 193, 951.25 11, 328, 829. 47 XVIII. December 15, 1920, the Ford Motor Company (Delaware) paid $11,328,829.47 as the fourth installment of tax due in connection with the assessment made for 1919 against the companies named in the tabulation shown in finding XVI, and such amount was credited by the collector as follows: Ford Motor Company (Delaware). Ford Motor Company (Michigan) Henry Ford & Son, Inc. (Michigan). Total. $5, 544, 095. 70 5, 590, 782. 52 193, 951. 25 11, 328, 829. 47 XIX. September 16, 1921, as the result of an examination of the books and records of the Ford Motor Company (Dela Reporter's Statement of the Case ware), Ford Motor Company (Michigan), Henry Ford & Son, Inc. (Michigan), and other affiliated companies involved, the Commissioner of Internal Revenue advised the various companies involved of their affiliation status for 1919 as follows: Affiliated: Ford Motor Company (Delaware) from July 9, 1919. Ford Motor Company (Michigan) from September 1, 1919. Henry Ford & Son, Inc. (Michigan), full year. Henry Ford & Son, Inc. (New York), from May 2, 1919. Hamilton & Rossville Hydraulic Company, full year. Dearborn Publishing Company, full year. Dearborn Realty & Construction Company, from January 10, 1919. Nonaffiliated: Ford Motor Company (Michigan), January 1, 1919, to August 31, 1919. XX. January 11, 1923, the Commissioner sent a thirty-day letter to "Ford Motor Company, Detroit, Michigan ", showing his determination of tax liability as follows: In the foregoing determination the Ford Motor Company (Michigan) was considered on a separate basis from January 1, 1919, to and including September 1, 1919, and from September 2, 1919, to December 31, 1919, it was included in a 344-36-cc-vol. 81-5 |