119 Reporter's Statement of the Case which the assessments were made, and described the taxes being assessed as follows: The assessment of February 1935 in the amount of $18,480 was later reduced by the application thereto of $2,598.60 received from Mary H. L. Thompson in compromise of her distilled spirits tax liability and the balance of that assessment, $15,881.40, together with the other distilled spirits. taxes set forth above, has never been satisfied and is still outstanding on the Collector's records. Warrants of distraint were duly issued against the property of Andrew Kjar for the above distilled spirits taxes in the amounts of $18,480, $11,049.80, $23,067, and $36,712.50. Following the reduction in the amount of the assessment of $18,480 to $15,881.40, as described above, a warrant of distraint in the reduced amount was issued against Andrew Kjar's property. The warrants were served upon Andrew Kjar personally by a Deputy Collector on October 27, 1942. 6. Andrew Kjar and his wife, Katherine D. Kjar, together with Ester Harley Sharon, and Edgar and Mary M. Sanchez appealed to the Board of Tax Appeals from the above income tax determinations of the Commissioner. However, during the proceedings before the Board, Edgar and Reporter's Statement of the Case 108 C. Cls. Mary Sanchez stipulated that they were liable for the entire amount of the deficiencies determined against them. With regard to Ester Harley Sharon, the Board determined there was no liability on her part as transferee in respect of the income tax and penalties of Andrew Kjar for the years 1928, 1929, and 1930, and subsequently the Commissioner refunded to her $5,394.75. As to Andrew Kjar, the Board determined [opinion entered September 30, 1941] that during the year 1928 he had imported 2,566 cases of liquor of which he sold 2,381 cases, and that during 1930 he had imported and sold 750 cases. The Board also found that during the years 1929, 1931, and 1932, Kjar had not been engaged in the purchase and sale of liquor. A recomputation on February 17, 1942, under the Board's decision of the deficiencies as determined by the Commissioner, resulted in the determination that Kjar had no income tax liability for the years 1929, 1931, and 1932, and that he had overpaid his income taxes for the years before the Board in the total amount of $16,025.59. Checks were accordingly issued by the appropriate disbursing officer in favor of Andrew Kjar and his wife, Katherine D. Kjar, for the amount of the overpayment determined by the Board and these checks were transmitted to the Collector of Internal Revenue at Atlanta, Georgia, for appropriate action. In view of the fact that the Collector had outstanding on his records against Andrew Kjar large amounts of distilled spirits taxes, which had been previously assessed and which had not been satisfied by payment, a Deputy Collector presented the checks to Andrew Kjar and his wife with the request that they endorse the checks in order that the amounts thereof might be applied in partial satisfaction of the distilled spirits taxes. Kjar and his wife refused to so endorse the checks. The Deputy Collector then requested Katherine D. Kjar to show what portion of the refund was due to her personally, but since she was unable to do so, the checks were returned to the Commissioner of Internal Revenue at Washington, D. C. These amounts have not been paid either to Andrew Kjar or his wife, Katherine D. Kjar. 7. The jeopardy income tax assessments referred to in finding 4 were made by the Commissioner in March 1939. 119 Reporter's Statement of the Case Because they were jeopardy assessments, first and second notices of the assessments and demand for payment were sent to the taxpayers simultaneously on March 13, 1939. When the taxes were not paid, warrants for distraint were issued and the Collector seized improved property designated as lot 11, block 3, San Marco Island, Florida, recorded in the names of Peter Orloff and Katherine D. Orloff, which names were aliases of Andrew and Katherine D. Kjar name of Katherine D. Orloff, which was the alias of Katherine D. Kjar.* Notice of the seizure was sent to the taxpayers by mail at their last-known address on January 12, 1940. Notices that the property would be sold on February 6, 1940, were published in the Miami Daily News at Miami, Florida, on January 12, January 19, and February 2, 1940, and similar notices of the sale were posted at the Miami Post Office, the City Hall, and the Courthouse, Miami, Florida. The above property was sold February 6, 1940, at public auction on the Courthouse steps at the Post Office, Miami, Florida, to one M. Gonzalez Pardo, and a collector's deed was duly issued to the purchaser. The property was sold for $6,000 and that sum was applied to the 1929 income tax assessments against Andrew Kjar and Katherine D. Kjar, alias Peter Orloff and Katherine D. Orloff. The income tax assessments for 1929 against Andrew Kjar and Katherine D. Kjar had been received by the Collector at Jacksonville, Florida, by transfer from the Collector at Atlanta, Georgia, on March 13, 1939, and a tax lien was duly recorded against the taxpayers' property in Dade County, Florida, on March 18, 1939. The Collector also seized certain personal property of Andrew Kjar and Katherine D. Kjar, such property consisting of furniture and household effects located on the premises of the real property seized. That personal property was also sold by the Collector in the same manner as the real property, the purchaser being M. Gonzalez Pardo. The selling price of the personal property was $100 which was applied to the 1928 income tax assessments against Andrew Kjar and Katherine D. Kjar, alias Peter Orloff and Kath*Amended May 5, 1947. Reporter's Statement of the Case 108 C. Cls. erine D. Orloff. The Collector also obtained from Andrew Kjar's account with the Miami Beach First National Bank the sum of $356.92, which amount was applied to the 1928 income tax assessment against Andrew Kjar and his wife, Katherine D. Kjar. 8. The assessment of income taxes for the year 1929 made by the Commissioner in March 1939 against Ester Harley Sharon, as transferee of the property of Andrew Kjar and Katherine D. Kjar, in the amount of $48,977.09, was not paid by that taxpayer. Subsequently that assessment was likewise transferred to the Collector at Jacksonville, Florida, in order that he might proceed against property of Ester Harley Sharon located in that district. As this was a jeopardy assessment, first and second notices and demand for payment were sent to that taxpayer simultaneously on March 13, 1939, and later a tax lien was filed against her property. Warrants of distraint were also issued on her property on March 18, 1939. Subsequently the Collector seized the following property standing in her name: Lots 7 and 8, block 2, San Marino, Dade County, Florida; and lots 6 and 8, block 7, San Marco, Dade County, Florida. Notices of the proposed sale of this property were transmitted to Ester Harley Sharon by the Collector at her last-known address on February 8, 1940, and were published in the Miami Daily News on February 12, 19, and 26, 1940. Notices of the proposed sale were also posted at the Post Office, City Hall, and Courthouse, Miami, Florida, on February 8, 1940. Pursuant to the above notices, the properties were sold on March 6, 1940, at public auction, at the Post Office, Miami, Florida (the selling place being less than five miles from the location of the property), as follows: Lots 7 and 8, block 2, to Joseph Weintraub for $3,900; lot 6, block 7, to H. Martin Dale for $210; and lot 8, block 7, to C. S. Todd for $320. Appropriate deeds were issued to the purchasers by the Collector. The amounts received were applied to the 1929 income tax assessments against Ester Harley Sharon described above. 9. In March 1940 the Collector at Jacksonville, Florida, transferred to the Collector for the Second District of New York income tax assessments against Andrew Kjar and his 119 Reporter's Statement of the Case wife, Katherine D. Kjar, covering the years 1928, 1929, and 1930. Prior to that time it had been ascertained that Kjar and his wife had a brokerage margin account with the brokerage firm of Fenner & Beane, 67 Broad Street, New York City, under the name of Peter and Katherine Orloff, and the assessments were transferred for the purpose of enabling the Collector at New York to proceed against the securities in the account of the taxpayers with that brokerage firm. The assessments so transferred were the jeopardy assessments which had been made by the Commissioner against Andrew Kjar and Katherine D. Kjar in March 1939 and heretofore described. As these assessments had not been satisfied by the taxpayers, warrants of distraint were issued by the Collector at New York under date of March 26, 1940, and assigned to a field deputy for collection. The field deputy ascertained that Kjar and his wife owned certain stocks which were held in their account with the brokerage firm of Fenner & Beane and notice of lien and notice of levy against that property were prepared and served on the brokerage firm together with copy of the warrants of distraint and formal demand advising the brokerage firm that they were in possession of certain property belonging to the taxpayers and directing that such property be turned over to the Collector of Internal Revenue. 10. April 1, 1940, counsel for the brokerage firm addressed the following letter to the Collector of Internal Revenue for the Second District of New York: My clients, Fenner & Beane, Stock and Commodity Brokers at 67 Broad Street, New York City, have shown me the various notices of levy, warrants for distraint and final notices and demands served on them by your deputies on March 27, 1940 and March 29, 1940 against accounts which it carried for Mrs. Mary M. Sanchez and Peter Orloff. Please be advised that the status of these accounts is as follows: The account of Mrs. Mary M. Sanchez is long: 200 Amer. Car & Foundry. 100 Blaw Knox. 100 Hudson Mot. 100 Pfeiffer Brew. 746854-47- -10 400 Liquid Carbonic. 100 Houdaille Hershey B. 100 Natl. Pow. & Lt.. 2,000 Seaboard Air Line. |