The opinion of the court was delivered by: BOLDT
The above-entitled cause having come on regularly for trial before the Honorable George H. Boldt, United States District Judge presiding, sitting without a jury, on December 16, 17 and 18, 1959, the plaintiffs represented by their attorneys, Carlson, Newlands, Reha & Sinnitt by Reuben C. Carlson and John J. Reha, Jr., and Watkins, Lund & Peck by Richard F. Alden, and the defendants represented by his attorneys, Charles P. Moriarty, U.S. Atty., Seattle, Wash., Charles Billinghurst, Asst. U.S. Atty., and Thomas Frazier, attorney, Department of Justice, the Court having considered the Pre-Trial Order, written stipulations of the parties, oral testimony, documentary evidence, oral argument and memoranda and trial briefs of counsel and the Court being fully advised in the premises, makes its Findings of Fact and Conclusions of Law as follows:
(1) Plaintiff, H. D. Maxwell is the husband of plaintiff, Josephine E. Maxwell. Plaintiff Oswald Thomas is the husband of plaintiff Harriet S. Thomas. During the years 1952 and 1953 and for many years prior thereto plaintiffs H. D. Maxwell and Oswald Thomas were general partners in Maxwell Petroleum Company, a general partnership. All of the plaintiffs at all times mentioned herein were residents of the Western District of the State of Washington.
(3) This action is filed pursuant to the provisions of Title 28 U.S.C. § 1340 for the recovery of income taxes and interest thereon collected from plaintiffs by defendant for the calendar year 1953, together with interest thereon from the respective dates of payment. The parties in their Pre-Trial Order have admitted the jurisdiction of this Court.
(4) Prior to August 8, 1952 said partnership, Maxwell Petroleum Company, engaged in the business of a wholesale distributor of petroleum products and automobile accessories in certain counties in the State of Washington. Plaintiff Maxwell's interest in this partnership during the years 1952 and 1953 was 75% and plaintiff Thomas' interest was 25%. Said partnership reported partnership income on an accrual basis and was on a fiscal year ending May 31. Plaintiffs reported their income on a cash basis and were on a calendar year.
(5) On examination of said partnership's income tax return for the fiscal year ending May 31, 1953 the Commissioner of Internal Revenue reclassified certain of said proceeds of a sale as ordinary income and short-term capital gain. Deficiencies in federal income tax were assessed against plaintiffs in accordance with such determinations.
(6) As a result of these determinations, plaintiffs were assessed and on the dates shown paid defendant the following amounts of income tax and interest:
Tax Assessed Interest Total
Plaintiffs Maxwell October 3, $248,874.07 $52,999.95 $301,874.02
Plaintiffs Thomas October 23, 63,726.40 13,784.98 77,511.38
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