Bull v. United States
295 U.S. 247 (1935)

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U.S. Supreme Court

Bull v. United States, 295 U.S. 247 (1935)

Bull v. United States

No. 649

Argued April 9, 1935

Decided April 29, 1935

295 U.S. 247

Syllabus

1. Moneys received by a deceased partner's estate as his share of profits earned by the firm before he died, are taxable as his income and also are to be included as part of his estate in computing the federal estate tax. P. 295 U. S. 254.

2. Where the articles of a personal service partnership having no invested capital provide that, in the event of a partner's death, the survivors, if his representative does not object, shall be at liberty to continue the business for a year, the estate in that case to share the profits or losses as the deceased partner would if living, the profits coming to the estate from such continuation of the business are not to be regarded as the fruits of a sale of any interest of the deceased to the survivors, but are income of the estate, taxable as such; they are no part of the corpus of the estate left by the decedent upon which the federal estate tax is to be computed. P. 295 U. S. 255.

3. Retention by the Government of money wrongfully exacted as taxes is immoral, and amounts in law to a fraud on the taxpayer's rights. P. 295 U. S. 261.

4. A claim for recovery of money so held may not only be the subject of a suit in the Court of Claims, but may be used by way of recoupment and credit in an action by the United States arising out of the same transaction, and this even though an independent suit against the Government to enforce the claim would be barred by the statute of limitations. P. 295 U. S. 261.

5. Recoupment is in the nature of a defense arising out of some feature of the transaction upon which the plaintiff's action is grounded. Such a defense is never barred by the statute of limitations so long as the main action itself is timely. P. 295 U. S. 262.

Page 295 U. S. 248

6. The Government wrongfully collected and retained an estate tax on moneys earned for and paid to an estate in partnership transactions after the decedent's death, and which were not part of the corpus of the estate and were properly taxable only as income of the estate. Before the time allowed for claiming reimbursement had elapsed, the Government proceeded to assess and collect an income tax on the identical moneys.

Held:

(1) That the taxpayer was entitled to recoup from the amount of the income tax the amount of the unlawful estate tax by suit for the difference in the Court of Claims, although suit to recover the unlawful tax independently had become barred. Pp. 295 U. S. 261-262.

(2) A complaint by which the taxpayer prayed judgment in the alternative, either for the amount of the income tax or for what should have been credited against it on account of the estate tax, was sufficient to put in suit the right to recoupment. P. 295 U. S. 263.

7. The Court of Claims is not bound by any special rules of pleading; all that is required is that the petition shall contain a plain and concise statement of the fact relied on and give the United States reasonable notice of the matters it is called upon to meet. P. 295 U. S. 263.

79 Ct.Cls. 133, 6 F.Supp. 141, reversed.

Certiorari, 294 U.S. 704, to review a judgment rejecting a claim for money unlawfully exacted as taxes.

Page 295 U. S. 251

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