Rev. Rul. 71-467

The purpose of this Revenue Ruling is to update and restate under the current statute and regulations the position set forth in G.C.M. 3463, C.B. VII-1, 142 (1928). The question presented is whether, under the circumstances described below, a consent executed under the authority of section 6501(c)(4) of the Internal Revenue Code of 1954, extending the period of limitations on assessment, is valid.

M Company, a Connecticut corporation, filed its income tax return for the calendar year 1961 on March 14, 1962, showing no tax due. In February 1965, it was determined that the corporation had taxable income for the year 1961. The corporation had been dissolved in 1964 and, pursuant to Connecticut statute, the members of the board of directors and their successors, acting in accordance with the bylaws and certificate of incorporation, were in charge of winding up the affairs of the corporation. On February 10, 1965, a consent to extend the period for assessment to December 31, 1965, signed by A as president and director, was filed for the corporation. At the time of the dissolution of the corporation, A was president, a director, and a principal stockholder of the corporation, and at the time of signing the consent he was still acting as president and one of the directors in charge of the liquidation. On May 12, 1965, a notice of deficiency authorized by section 6212 of the Code was mailed to the corporation. Before the expiration of the extended period for assessment, the tax deficiency was properly assessed pursuant to section 6213(b)(3) of the Code and paid.

A claim for refund signed by A and the other directors in charge of the dissolution of the M Company, was filed within two years after the deficiency was paid for the full amount paid. The taxpayer in its claim for refund contended that the tax was assessed after the running of the statutory period of limitations on assessment because the consent signed by A was not valid, as it should have been signed by all the directors in charge of the dissolution.

Section 33-378-(b) of the Connecticut General Statutes Annotated 1958 (West, 1960) entitled "Effect of Dissolution" provides:

A dissolved corporation shall cease to carry on its business and shall do only such acts as are necessary or expedient to collect, convey and dispose of such of its properties as are not to be distributed in kind to its shareholders, pay, satisfy and discharge or make adequate provisions for its liabilities and obligations, distribute its assets and adjust and wind up its business and affairs as expeditiously as practicable, and for such purpose it shall continue as a corporation.

Section 33-379(b) of the Connecticut General Statutes Annotated 1958 (West, 1960) provides:

The board of directors of a dissolved corporation and their successors shall proceed to wind up the affairs of the corporation as expeditiously as practicable and shall act as a board of directors in accordance with the by-laws and the certificate of incorporation until the affairs of the corporation are completely wound up. A corporation and its shareholders, directors and officers shall have full power to take all corporate action appropriate to wind up its affairs, including the power to maintain, or to reestablish after failure to maintain, a board of directors and officers.

Section 33-378(b), above, of the Connecticut Statutes continues a dissolved corporation in existence for the purpose of winding up its affairs. As president of the corporation, A clearly had authority to sign the consent to extend the statute. Commissioner v. Godfrey, 50 F. 2d 79 (1931), cert. denied, 284 U.S. 653 (1931).

Accordingly, it is held that the consent is valid. Thus, the tax was assessed against the corporation in its corporate capacity within the statutory period, as extended by the consent signed by A as president and on behalf of the corporation, and the claim for refund should be rejected.

G.C.M. 3463 is superseded, since the position set forth therein is restated under current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.