Rule 14 of the Board's rules of practice promulgated under the authority granted by section 907(a) relates to the answer to be filed by the Commissioner and provides in part: The answer shall be so drawn as fully and completely to advise the petitioner and the Board of the nature of the defense. It shall contain a specific admission or denial of each material allegation of fact contained in the petition and a statement of any facts upon which the Commissioner relies for defense or for affirmative relief or to sustain any issue raised in the petition in respect of which issue the burden of proof is, by statute, placed upon the Commissioner. The Revenue Act of 1924 contained no provision like section 274(e) of the 1926 Act, but under the prior act the Board held that it had the right and duty to redetermine the correct deficiency, even though the amount was greater than that determined by the Commissioner. Hotel De France, 1 B. T. A. 28. The wording of the 1926 Act left no doubt as to our right in that respect, but by the same section of the act our right to determine whether the increase shall be assessed is limited to those instances where a claim for the increase is asserted by the respondent. The effect of the present practice of the respondent, if allowed, will defeat the purpose of the 1926 Act, for the "catch-all" provision of the answer will assert a claim for an increased deficiency in every case, and our procedure will revert back to that followed under the 1924 Act. We do not mean to say that in no case is a prayer for an additional deficiency proper. In Moise v. Burnet, 52 Fed. (2d) 1071, it is quite distinctly held that a prayer for an increase in the deficiency is necessary if the respondent is to obtain the benefit of any increase claimed in his answer. In that case the respondent answered the petition and alleged that he had improperly allowed certain deductions, and that income should be increased accordingly, but made no specific claim for the resulting increase either by prayer or otherwise. The Board held that the allegations of the answer constituted a sufficient claim within the meaning of the statute, and allowed the increased deficiency, upon a showing that the deductions referred to in the answer had been improperly allowed (13 B. T. A. 525). The Circuit Court of Appeals reversed our holding, saying in part: The Commissioner did not properly "assert" "claims" for additional deficiencies, in the amended answers filed by him before the Board. The rule that tax statutes should be liberally construed in favor of the taxpayer clearly requires that a claim should be actually and definitely made, and not left to conjecture, inference, or interpretation. No words of claim, request, or demand were used by the Commissioner. He must be bound by his pleadings, and cannot be assumed to have intended to present a claim that he did not actually assert. The court further pointed out that "the relief demanded is gauged by the prayer." While, as indicated by the Moise decision, it is necessary for the respondent's pleadings to include an appropriately framed prayer for relief if an additional deficiency is sought, it is our understanding of the intent of the revenue act that the prayer must have the support of specific claims in each case based on specific grounds. The undoubted purpose of section 274 (e) was to put the taxpayer on notice of any demand that the Commissioner proposed to make for an increase in the deficiency determined. The respondent's determination when it comes before us is presumptively correct. He can not consistently rely on that presumption and at the same time urge that the determination is wrong by asking for an increase. If the determination is wrong in any particular, the respondent should be required to allege particularly wherein it is in error and state the facts relied on, as required by our Rule 14. The prayer of respondent's answer in this case not only fails to meet the intent of the statute, but is in violation of the fundamental purpose of pleadings. In Hill v. Mendenhall, 21 Wall. 453, it is said: The office of pleading is to inform the court and the parties of the facts in issue; the court that it may declare the law, and the parties that they may know what to meet by their proof. The case of Pugmire v. Oregon S. L. R. Co., 92 Pac. 962; 13 L. R. A. (N. S.) 565, quotes from Pomeroy on Code Remedies as follows: The very object and design of all pleading by the plaintiff, and of all pleading of new matter by the defendant, is that the adverse party may be informed of the real cause of action or defense relied upon by the pleader, and may thus have an opportunity of meeting and defeating it if possible at the trial. Unless the petition or complaint on the one hand, and the answer on the other, fully and fairly accomplishes this purpose, the pleading would be a useless ceremony, productive only of delay, and the parties might better be permitted to state their demands orally before the court at the time of the trial. The requirement therefore that the cause of action or the affirmative defense must be stated as it actually is, and that the proofs must establish it as stated, is involved in the very theory of pleading. In McKinney v. Carson, 35 Utah 180; 99 Pac. 660, 664, it is said: In every pleading the opposite party is entitled to notice of what the proof will be directed to, and this notice must appear from the pleading. Under these rules of pleading we are of the opinion that that part of the respondent's answer attacked by petitioner is, as asserted, meaningless, and should be stricken. An order will be entered striking the prayer of the answer and granting the respondent time to amend. Reviewed by the Board. A. V. STEGEMAN, PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Mrs. FANNIE L. STEGEMAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. EUGENE S. DALEY, EXECUTOR OF THE ESTATE OF CLARA P. ROBSON, PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. H. R. STEGEMAN, PETITIONER, v. COMMISSIONER OF INTERNal RevENUE, RESPONDENT. H. M. STEGEMAN, PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. WILLIAM L. STEGEMAN, PETITIONER, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Mrs. MABEL K. STEGEMAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. ALBERT V. STEGEMAN, JR., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. W. C. SANDERS, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Docket Nos. 26643-26651. Promulgated March 22, 1932. The petitioners' liability, as transferees, for the unpaid taxes of the transferor is barred as to the 1917 deficiency, but not as to the 1919 and 1920 deficiencies. Lawrence A. Baker, Esq., and Henry Ravenel, Esq., for the petitioners. H. B. Hunt, Esq., for the respondent. The Commissioner asserts against the petitioners, as transferees of the assets of a dissolved corporation, liability for the following plus any accrued interest on and penalty for unpaid income and profits taxes of the dissolved corporation for the years and amounts as follows: 1917 $21, 801. 26 1919 1920 Total_ 30, 652. 89 The respondent now admits that the correct amount of the claimed deficiency for 1917 is $16,274.22. At the hearing petitioners relieved the respondent of the burden of proving that they received assets of the dissolved corporation, by abandoning the issue as to their status as transferees. The petitioners contend that their liability is barred by the statute of limitations. The death of the original petitioner in Docket No. 26645 being suggested of record, the executor of her estate has been substituted as the petitioner herein. These proceedings were consolidated. FINDINGS OF FACT. The petitioners, residents of the State of Kentucky, were formerly stockholders of the Old '76 Distilling Company, which was duly dissolved pursuant to a resolution of the directors and stockholders. of the company on May 21, 1918. Thereafter, the affairs of the company were wound up and its assets distributed to the stockholders at the time of dissolution. On April 1, 1918, the Old '76 Distilling Company filed its incometax return for the year 1917. On February 17, 1923, the taxpayer filed a waiver extending the time for assessment and collection of its 1917 income and profits taxes to February 17, 1924. On March 21, 1923, the Commissioner assessed against the taxpayer as additional taxes for 1917 the sum of $59,425.78, which amount has been reduced by payments and credits to the amount of the claimed deficiency for 1917. This assessment appears on the March, 1923, special assessment list No. 5, and bears a notation to the effect that there was a noncompliance with section 250 (d) of the Revenue Act of 1921. A claim for the abatement of this assessment was finally rejected by the Commissioner, by letter dated October 30, 1924, from which action an appeal in the name of the corporation was filed with the Board on December 29, 1924, and assigned Docket No. 1262. The Commissioner's motion to dismiss the appeal for lack of jurisdiction was denied. The hearing upon the merits of the case was held on May 13, 1925, and briefs were filed on or prior to May 25, 1925. The Board promulgated its opinion (reported in 3 B. T. A. 1346) on April 20, 1926, and entered its decision therein on April 22, 1926. No issue regarding the statute of limitations was raised in those proceedings. The entire record of the proceedings in Docket No. 1262 is incorporated herein by reference. On March 15, 1920, the taxpayer filed its income-tax return for the year 1919. In December, 1924, the Commissioner assessed against the taxpayer additional taxes in the amount of $356.52 for the year 1919. No waiver or consent has been filed by the taxpayer extending the time for the assessment or collection of its 1919 taxes. On May 28, 1923, the taxpayer filed its income-tax return for the year 1920. That return indicated a tax liability of $6,094.60, which sum was assessed on September 1, 1923. On or about December 1, 1924, the Commissioner assessed against the taxpayer $899.67 as additional taxes and $1,748.57 as a penalty for the year 1920. No waiver or consent has been filed by the taxpayer extending the time for the assessment and collection of its 1920 taxes. No suit or proceeding for the collection of the alleged deficiencies has been instituted by or on behalf of the Commissioner against the taxpayer. On February 17, 1927, the Commissioner sent to the petitioners notices of tax liability under section 280 of the Revenue Act of 1926, advising that he proposed to assess the amount of the alleged deficiencies against them as transferees of the assets of the dissolved corporate taxpayer. OPINION. SMITH: The original petitions set forth several allegations of error that were either abandoned or waived at the hearing. The only issue remaining for our determination is whether or not the petitioners' liability is barred by the applicable statute of limitations. The respondent contends: that the matter is adjudicated and petitioners cannot now raise this issue because (1) the 1917 tax liability of the Old '76 Distilling Co. was decided by the Board under Docket #1262 on the merits after full hearing; (2) If, as now claimed, the tax was barred from collection in February 1924, prior to the time the appeal in Docket #1262 was filed, the company had a right to defend against the imposition of the deficiency on that ground; (3) The failure to raise the issue of limitations on behalf of the company was a waiver of this defense; (4) Such action by the company in waiving the defense is binding upon petitioners, its former stockholders, and who were in fact the interested parties prosecuting the petition in Docket #1262; and (5) The |