The opinion of the court was delivered by: NOONAN
In this case, the plaintiff has moved for summary judgment and the defendant has made a cross-motion for like relief.
The question is whether the plaintiff partnership became subject to Federal stamp taxes with respect to alleged transfers of its entire holdings of stocks and bonds on three different occasions:
(a) Upon the voluntary withdrawal on January 1, 1945, of one general partner;
(b) On the death on April 19, 1945, of another general partner; and
(c) Upon the admission to the partnership on January 1, 1947, of two new general partners.
The Commissioner ruled that each change in the firm membership, whether or not there was a dissolution of the partnership, and formation of a new one, effected a change in ownership of the securities held by the partnership and a taxable transfer of legal title thereto. The taxes in controversy were assessed as a result of this ruling.
The facts have been stipulated between the parties and it is agreed that no further testimony will be offered.
On and prior to January 1, 1945, plaintiff was a limited partnership and one of the partners was a Mr. Lloyd S. Miller. On that day, Mr. Miller withdrew from the partnership and subsequently withdrew the sum of $ 29,222.03, being his share of the partnership capital and representing about 6/10ths of 1% of the firm capital. On that date the partnership owned shares of various stocks and also was the owner of various bonds.
On or about April 19, 1945, another of the general partners of the plaintiff, Mr. Henry L. Rosenfeld, died and subsequently his executors withdrew from the partnership in cash, the sum of $ 146,946.90 being his share of the capital of the firm and representing about 2 1/2 % of the firm capital. On that date, the plaintiff owned 27,028 shares of various stocks and $ 6,969,600 principal amount of various bonds.
On January 1, 1947, there were admitted as general partners of the plaintiff a Mr. Leo G. Shaw and Mr. Charles J. Simon. Mr. Shaw contributed $ 25,000 and Mr. Simon $ 5,000 to the capital of the partnership; the total of these two contributions amounted to less than 1/2 of 1% of the firm capital. Immediately after these contributions the total capital of the firm amounted to $ 5,815,000. On that day, January 1, 1947, the plaintiff owned 9,349 shares of various stocks and $ 9,324,000 face amount of various bonds.
It is stipulated that if the plaintiff had transferred all of its stocks and bonds which it owned on the aforesaid dates, namely January 1, 1945, April 19, 1945 and January 1, 1947, it would have incurred transfer taxes in the amount of $ 5,526.10 (on January 1, 1945), $ 4,472.34 (on April 19, 1945), $ 4,981.70 (on January 1, 1947) or a total of $ 14,980.14, the amount involved in this suit.
On or about June 7, 1948, demand was made of the plaintiff by the Collector of Internal Revenue for the payment of documentary stamp taxes in the said amount of $ 14,980.14 which sum was paid by the plaintiff on or about June 9, 1948.
On or about September 28, 1949, the plaintiff filed with the Collector of Internal Revenue a claim for refund of the said stamp taxes which was disallowed and rejected by the ...