Before KNOCH and CASTLE, Circuit Judges, and JUERGENS, District Judge.
The Commissioner of Internal Revenue (hereinafter called "Commissioner") petitioned for review of the decision of the Tax Court of the United States involving Abbott L. Johnson and Elizabeth G. Johnson, respondents (hereinafter called "Taxpayer").
The Commissioner determined deficiencies in taxpayer's income tax and additions thereto as follows:
Year Deficiency Additions to tax, Sec. 294(d)2 11
The sole issue is whether, for purposes of applying the five year period of limitations under Section 275(c)*fn2 of the Internal Revenue Code of 1939 the amounts of $7,722.73 and $10,790.26 received by taxpayer during the years 1951 and 1952, respectively, from his employer as reimbursement for amounts expended by taxpayer for travel, entertainment and sales promotion activities on behalf of his employer are properly includible in his gross income, or whether only the amount which exceeds allowable deductions is includible in his gross income.
All facts have been stipulated.
Taxpayer and his wife Elizabeth G. Johnson filed joint returns for taxable years 1951 and 1952 with the proper collector. The returns reflected gross income in the amounts of $25,118.52 and $22,388.22 for the respective years. Taxpayer agreed with Commissioner's determination with respect to other adjustments which in light of our holding herein are not material. During the taxable years in question, taxpayer was employed as president of Warner Machine Products, Inc. located at Muncie, Indiana. Taxpayer reported on his return salary from Warner in the amount of $16,337.60 for the year 1951. He received an additional amount of $7,141.39 from Warner. Asbestos Company paid taxpayer $581.34 during 1951. The above total of $7,722.73 was not reported as gross income by taxpayer. He contends it represented a reimbursement for travel, etc. in behalf of Warner and Asbestos.
Similarly taxpayer reported for 1952 income, salary from Warner in the amount of $17,950.40. He received an additional amount of $10,790.26 from Warner as reimbursement for travel, etc., and respecting 1952 asserted the same contentions as to the 1951 return.
Prior to the expiration of the period of limitations for assessment of taxes under Section 275(c) of the Code of 1939, if applicable (but subsequent to the period for assessment provided in Section 275(a))*fn3 taxpayer and Commissioner executed Treasury Form 872 consenting to the extension of time for assessment of taxes for 1951 under Section 275(c) to June 30, 1958.
The period of limitation of assessment of taxes under Section 275(c) for the years 1951 and 1952, if applicable, had not expired prior to ...