After delay, Tillotson completes 101,000-bushel elevator at Wapello, Iowa

Wapello, Ia—The Wapello Elevator and Exchange has let contract for an all-concrete storage addition to its main building to the Tillotson Construction Co., Omaha. Work will begin this week and is to be finished in 60 days.

The Democrat and Leader, Davenport, Iowa, July 31, 1949

The Wapello elevator, by Sam Willson. The flag and ribbon were added during the Persian Gulf War.

New Grain Storage Structure at Wapello—

Here is the new $80,000 grain storage structure of the Farmers elevator at Wapello, which will be completed next week by the Tillotson Construction Co., Omaha, Neb. The structure is 135 feet in height with ground measurement of 24 by 40 feet, and has seven bins with total storage capacity of 101,000 bushels. The four corner bins are of 20,000 bushels capacity each and three inside or overhead bins each have 7,000 bushel capacity. Inlet and outlet pipes extend to the structure from the main elevator building shown in the photo, and the mechanism was operated for the first time Monday in a test run. Construction was started Sept. 1, but delays have extended the time of completion until some time next week. The new structure gives the elevator company a total storage capacity of 135,000 bushels of grain.

The Democrat and Leader, Davenport, Iowa, Dec. 8, 1949

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Editor’s note: We found an image of the Wapello elevator on a site called Tankwagon Express.

January 7, 2012

Hiya Tankwagon,

A partner and I are doing a blog about the grain elevators that our grandfathers built, and I believe that my own granddad’s Tillotson Construction Company, of Omaha, built the elevator at Wapello. We have a newspaper article that says it was being completed in 1949.

Can you supply any info? Also, could we use the photo that’s on your site?

Many thanks,

Ronald Ahrens

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January 8, 2012

Ronald,

Feel free to go ahead and use the picture. I can’t verify if that is a Tillotson elevator, but the date of 1949 is probably correct. Is there a place where they may have left a mark or identifier on the structure? Prior to that date, a large wooden square elevator stood in the approximate vicinity. It like most wooden elevators caught fire and burned sometime in the 1940s. Replacing it was a smaller wood structure tied to the feed mill, and the slip form. The wooden mill in the picture burned to the ground in the fall of 1994. While the concrete structure is still standing, it has not been in use since maybe 2001-2002. At that time, I worked there and we had some issues with the headhouse and confined spaces with the insurance company. It still stands unused. The entire facility has capacity for about 3 million bushels of grain more or less.  Since I left the company in 2005 my access to information on the building is not as readily available. But I will see what I can find for you.

Sam Willson

December 1950: Tillotson Construction’s Jess Weiser weds Lavonne Wiemers in Palmer, Iowa

Miss Lavonne Wiemers, daughter of the late Mr. and Mrs. B.R. Wiemers, and Jess Weiser, son of O.S. Weiser of El Reno, Oklahoma, were married Friday evening, Dec. 22, in St. Paul’s Lutheran church in Palmer, the Rev. R. Wagner performing the ceremony.

Miss Darlene Wiemers was maid of honor, and bridesmaids were Mrs. Kendall Peterson of Fonda and Mrs. George Mart of Estherville, all sisters of the bride, and Miss Norma Schoon of Palmer, friend of the bride.

Flower girl was Janet Peterson, and ring bearer was Tommy Mart, nephew of the bride.

Roger Osborne and George Christian served as attendants to the bridegroom. Ushers were Paul Wiemers and Kendall Peterson.

Following the ceremony a reception was held at the Palmer Legion hall for 75 guests.

Mrs. Weiser, a graduate of Palmer high school, has been employed in Palmer. The bridegroom graduated from Yukon, Okla., high school and served in the Air Transport Command for three years. He is employed by the Tillotson Construction Co. Mr. and Mrs. Weiser will make their home in Storm Lake.

Pomeroy (Iowa) Herald, January 11, 1951

Tillotson Construction wins U.S. tax case in 1962

TILLOTSON v. MCCRORY, 202 F. Supp. 925 (D.Neb. 03/17/1962)

[1] UNITED STATES DISTRICT COURT DISTRICT OF NEBRASKA [2] 0522-0524 [3] 202 F. Supp. 925, 1962.DNE.0000004<http://www.versuslaw.com&gt; [4] March 17, 1962

[5] R. O. TILLOTSON and Margaret Tillotson, Plaintiffs, v.

James L. McCRORY, Defendant, and United States of America, Intervenor. Mary V. TILLOTSON, Plaintiff, v. James L. McCRORY, Defendant, and United States of America, Intervenor. TILLOTSON CONSTRUCTION COMPANY, a corporation, Plaintiff, v. James L. McCRORY, Defendant, and United States of America, Intervenor

[6] Harry Welch, and James McGreevy, Omaha, Neb., for plaintiffs in all cases. , R. Michael Duncan, Dept. of Justice, Washington, D.C., for defendant and intervenor in all cases.

[7] The opinion of the court was delivered by: ROBINSON

[8] These cases were consolidated for trial and were tried to the Court.

[9] Briefly, the causes of action are as follows: The Tillotson Construction Company seeks a refund or $ 22,654.41, plus interest, representing income taxes for the calendar year 1953, 1954, and 1955, allegedly erroneously assessed and collected. The United States intervened in this action seeking to collect an unpaid assessment against the company for 1955 income taxes in the amount of $ 96,596.20, plus interest.

[10] The estate of R. O. Tillotson and his widow, Margaret Tillotson, seek the refund of $ 180.20, plus interest, representing 1955 income tax allegedly overpaid. The United States intervened seeking to collect an unpaid assessment against them for 1955 income taxes in the amount of $ 47,031.85, plus interest.

[11] Mary V. Tillotson seeks refund of $ 180.19, plus interest, representing the 1955 income tax allegedly overpaid. The United States intervened seeking to collect an unpaid assessment against her for 1955 income tax in the amount of $ 49,301.31.

[12] Three issues were presented for determination:

[13] 1. Whether the Commissioner abused his discretion in allocating certain items of income and expense reported by Tillotson Contracting Company, a partnership, to the 1954 and 1955 income of the Tillotson Construction Company, a corporation under the provisions of Section 482 of the Internal Revenue Code of 1954, 26 U.S.C.A. ␣482.

[14] 2. Whether the Commissioner was correct in his determination that rent paid for construction equipment by the corporation to the partnership for the years 1952-1954, inclusive, was excessive and therefore not allowable as a business expense deduction to the Corporation.

[15] 3. Whether the Commissioner was correct in disallowing some of the partnership’s claimed

Page 1 of 5depreciation deduction based upon a determination of longer useful lives of certain of the construction equipment owned by the partnership.

[16] The Tillotson Construction Company, hereinafter referred to as the corporation, was incorporated under the laws of Nebraska in 1938. As of May 1, 1952, the stockholders of the corporation were Rose Tillotson — 37 shares; Reginald O. Tillotson — 8 shares; and Mary V. Tillotson — 5 shares. Rose Tillotson, mother of Reginald and Mary, passed away intestate in 1953 and Reginald and Mary became the owners of her shares of stock.

[17] Tillotson Contracting Company, hereinafter referred to as the partnership, was formed in May of 1952 for the purpose of carrying on general building, construction and contracting business. The profits of the partnership were to be divided 50% To Reginald and 50% To Mary Tillotson.

[18] The corporation filed income tax returns on a calender year completed-contract basis for the years 1952-1955 inclusive. It returns for the years 1952 and 1953 showed net operating losses. The 1954 return showed a deduction for the net operating loss carryover remaining after carryback to the year 1951 and claim for refund was filed to recover the 1951 taxes paid, based upon the carryback. Upon audit, the Commissioner allowed an overassessment for 1951 based on a carryback of the 1952 operating loss, and asserted deficiencies for 1953 and 1954. These deficiencies were paid and claims for refund were filed with the District Director.

[19] The corporation return for the calendar year 1955 and the partnership return for its fiscal years ending April 30, 1955, and 1956, the joint return of R.O. and Margaret Tillotson and the individual 1955 return of Mary V. Tillotson were audited and the revenue agent carried forward the allocations of profits on contracts completed by the partnership to the corporation’s 1955 income and carried forward the Commissioner’s rental deduction adjustment. The corporation filed a claim for refund for allegedly overpaid 1955 taxes, based on the theory that certain costs should have been accrued as deductible expenses on the 1955 return, thereby reducing the income as reported on the alleged tax liability of the corporation. On the same date, Reginald and Margaret Tillotson and Mary V. Tillotson filed separate claims for refund for allegedly overpaid 1955 taxes based on the theory that certain partnership costs should have been included as deductible expenses on its partnership return for its fiscal year ending April 30, 1955, thereby reducing their 1955 distributable shares. After the lapse of six months without formal disallowance, the corporation brought suit on its disallowed claims for the years 1953 and 1954 and its claim for the year 1955, and the individual taxpayers filed their suits on their claims for the year 1955.

[20] The Commissioner thereupon issued statutory notices of deficiency to the corporation and to Reginald and Margaret Tillotson and Mary V. Tillotson for the year 1955, for the amounts involved in the three actions herein. Notice and demand were served, taxpayers defaulted, and the United States proceeded to intervene in these actions under the provisions of ␣7422(e), 26 U.S.C.A. 1958 ed., ␣7422, to recover the unpaid assessments.

[21] Section 482 of the Internal Revenue Code of 1954, provides as follows:

[22] ‘Allocation of income and deductions among taxpayers.

[23] ‘In any case of two or more organizations, trades, or business (whether or not incorporated, whether or not organized in the United States, and whether or not affiliated) owned or controlled directly or indirectly by the same interests, the Secretary or his delegate may distribute, apportion, or allocate gross income, deductions, credits, or allowances between or among such organizations, trades, or businesses, if he determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades, or businesses.’ (26 U.S.C. 1958 ed., ␣482.)

[24] This section of the statute authorizes the Commissioner to distribute or allocate gross income and deductions between businesses owned or controlled directly or indirectly by the same interests if he determines that such distribution or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of these businesses.

[25] The evidence presented here shows that the partnership was organized in May of 1952 as an equal partnership of Reginald and Mary Tillotson and that the initial business of the partnership consisted of renting construction equipment formerly owned by the corporation to the corporation for use of the corporation on construction jobs. The corporation was organized in 1938 and it engaged in the construction of grain elevators. It is undisputed that the Tillotson name became well known in this business. In 1952, Reginald and Mary were the managing officers and stockholders of the corporation and while their mother was the majority stockholder, she was inactive in the business.

[26] Commencing in 1954 the partnership began taking grain elevator construction contracts in its own name as well as continuing to rent construction equipment to the corporation for jobs being performed by the corporation. During the calendar year 1954 the partnership completed one contract and the Commissioner allocated the gross profits on this contract to the corporation. During the calendar year 1955 the partnership completed eight contracts and the Commissioner allocated the gross profits from those contracts to the corporation’s 1955 income and made a corresponding allocation of administrative expense to the corporation and partnership income was adjusted accordingly. The issue for the Court’s determination is whether the Commissioner abused the disrcretion granted him under ␣ 482 in making this allocation.

[27] The Government contends that the taxpayers cannot properly contest the ‘common control requirement’ of ␣482, alleging that the two entities, the corporation and the partnership, were being operated by the same people, and as of the date the partnership started to undertake construction contracts, they were the sole beneficial owners of the corporation’s stock.

[28] Treasury Regulation 118 (1939 Code), ␣39.45-1(a)(3), defines the term ‘controlled’ in ␣482 to include:

[29] ‘* * * any kind of control, direct or indirect, whether legally enforceable, and however exercisable or exercised. It is the reality of the control which is decisive, not its form or the mode of its exercise. * * *’

[30] The important criteria discussed by the Courts in ‘split-up’ cases has been whether the split-up represented a logical, natural or functional division of the business, and whether the split-up was motivated by business reasons or tax avoidance. See and compare: Idaho Livestock Auction v. United States, D.C., 187 F.Supp. 875; Twin Oaks v. Commissioner, 9th Cir., 183 F.2d 385, 24 A.L.R.2d 466; Raymond Pearson Motor Co. v. Commissioner, 5th Cir., 246 F.2d 509; Seminole Flavor Co. v. Commissioner, 4 T.C. 1215, 1219-1221; Buffalo Meter Co. v. Commissioner, 10 T.C. 83, 89; Palm Beach Aero Corp. v. Commissioner, 17 T.C. 1169, 1174.

[31] From the evidence presented in these cases the Court finds that the corporation and the partnership were, during the period in question, separate and distinct entities with legitimate business purposes. At all times subsequent to the formation of the partnership, books and records were kept by the joint bookkeeping department of the two organizations reflecting the financial position of each and the income derived from these respective businesses was readily ascertainable and attributable to the business which earned it. The books and records of the organizations were inspected and audited by an independent auditing firm and separate bank accounts were kept by the two organizations. There were no attempts to distort the true gross income of either organization.

[32] The businesses here in question were separate and distinct entities with legitimate business purposes, and even though controlled by the same interests, they transacted business between themselves at arms length. From the record here I have concluded that the Commissioner erred in allocating funds of the partnership to the corporation.

[33] As to the second issue presented by these cases, the Commissioner, as part of the deficiencies in issue here, disallowed the deduction by the corporation of part of the equipment rentals charged by the partnership.

[34] Section 23(a)(1)(A) of the Internal Revenue Code of 1939, and Section 162(a) (3) of the Internal Revenue Code of 1954, provide as follows:

[35] Internal Revenue Code of 1939: [36] ‘ ␣23. Deductions from gross income. [37] ‘In computing net income there shall be allowed as deductions: [38] ‘(a) (As amended by ␣121(a), Revenue Act of 1942, c. 619, 56 Stat. 798) Expenses. [39] ‘(1) Trade or business expenses.

[40] ‘(A) In general. All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including * * * rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity. * * *’ (26 U.S.C. 1952 ed., ␣23.) Internal Revenue Code of 1954: ‘ ␣162. Trade or business expenses.

[41] ‘(a) In general. There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including —

[42] ‘(3) rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity.’ (26 U.S.C. 1958 ed., ␣162).

[43] These sections of the code provide for the deduction of rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity. The issue here is whether the payments in question represented actual rental payments required to be made as a condition to the continued use or possession of the property. If they were not wholly rental payments then the excess is not deductible.

[44] The Court of Appeals for the Eighth Circuit has held that in cases of close relationship between lessor and lessee, close scrutiny of the situation is appropriate in determining whether some part of the amounts designated as rentals were in fact disguised distributions of profits or dividends, Potter Electric Signal & Manufacturing v. Commissioner, 8 Cir., 286 F.2d 200; and arrives at the determination by inquiry into what constitutes a reasonable rental for the property in issue. The taxpayer who claims the deduction has the burden of proof to establish what amounts constitute reasonable rentals and must overcome the presumption of correctness of the Commissioner’s determination.

[45] The record here shows that the taxpayers relied upon the rates set out in the Associated Equipment Distributors rental compilations. Four expert witnesses from the Omaha area testified that the rentals charged were fair and reasonable and the Court is not convinced that the rates paid were in excess of what the lessee would have been required to pay had they dealt at arms length with a stranger. The Court cannot disregard the unimpeached and competent testimony of the taxpayers here, which stands uncontradicted. E. Albrecht & Son v. Landy, 8 Cir., 114 F.2d 202.

[46] The final issue presented is raised by the Commissioner’s reduction of the partnership’s depreciation deduction. The partnership, which owned all of the construction equipment used in the business after the acquisition from the corporation in May, 1952, deducted depreciation on the equipment. Depreciation was computed on a composite 30% Rate (or 3 1/3 year useful life) both on the new equipment and the old equipment purchased from the corporation. The Commissioner determined that the equipment subsequently purchased by the partnership had a longer useful life. The determination had the effect of decreasing the allowable depreciation deduction to the partnership, and it is this determination of a longer useful life for the subsequently purchased equipment that the taxpayers here dispute.

[47] Section 167(a) of the Internal Revenue Code of 1954, 26 U.S.C.A. ␣167(a) allows a reasonable allowance for the exhaustion, wear and tear of property used in business or trade. Section 1.167(a)-1(a) of Treasury Regulations on Income Tax, 1954, provides that the useful life of property shall be determined by reference to the taxpayer’s experience with similar property. A determination as to useful life is therefore a factual conclusion.

[48] Expert testimony by the taxpayers was to the effect that the depreciation allowance used by the partnership in connection with the used equipment and the smaller equipment was correct and comparable with the rate used by other companies in the Omaha area. I have concluded that while a life of five years might be appropriate for new equipment purchased by the partnership, such a conclusion cannot be reached as to the other equipment and that the composite five-year depreciation period determined by the Commissioner is unrealistic and must be overruled.

[49] In summary, the Commissioner’s allocation of construction profits from the partnership to the corporation is overruled. The Commissioner’s disallowance of rental deduction by the corporation on part of the equipment rentals charged by the partnership are overruled. The Commissioner’s adjustments to the partnership’s depreciation deduction on the construction equipment are overruled.

[50] Counsel for the plaintiffs will prepare Findings of Fact, Conclusions of Law and a Judgment, incorporating therein the stipulation of the parties, submit them to counsel for the Government for approval as to form only, and file them with the Court within 45 days from the date hereof.

19620317 ␣1992-2004 VersusLaw Inc.

Maxine Carter leaves Tillotson Construction to wed

Miss Maxine Carter, daughter of Mr. and Mrs. Leland Carter of Corning, Iowa, and Russell L. Bentley, so of Mr. and Mrs. Edgar Bentley of Marathon, Iowa, were united in marriage Saturday morning, October 8, by Rev. C.D. Reed, in the First Methodist church in Council Bluffs, Iowa.

Miss Catherine Dakir of Omaha, Nebraska, was bridesmaid, and William LePine, also of Omaha, Nebr., was best man.

The bride wore a toast color suit with green accessories. Her corsage was light pink roses tinted with brown. The groom wore a dark blue suit.

The bride was a graduate of Corning high school in 1948, then attended Commercial Extension Business College in Omaha, Nebr., graduating in April, 1949. She was then employed as secretary to the Tillotson Construction Company of Omaha until the 7th of October.

The groom graduated from Marathon high school in 1947, then attended National Railroad School in Omaha, graduating in July, 1949. He is now with the Chicago, Milwaukee, St. Paul and Pacific railroad.

The couple are waiting until the groom gets his first vacation for their honeymoon.

We extend our sincere congratulations to the newly weds.

Adams County (Iowa) Free Press, Oct. 13, 1949

Settling and cracking leads to suit against Tillotson Construction

This map shows the incorporated and unincorpor...

Dayton—Farmers Elevator Company has filed suit in federal court at Fort Dodge, Iowa, asking $92,120 from Tillotson Construction Co., Omaha, Neb.

The cooperative also is seeking a court order for the removal by the construction firm of a new 150,000-bushel elevator at Dayton. An alternate request included in the petition asks that if the court does not grant the damages and order the structure removed, that it should determine amount needed to place elevator in condition to conform with the contract between the companies and to grant that amount to the Dayton cooperative.

The petition charges that “due to faulty plans and construction the elevator is unsafe for use and in dangerous condition and is liable at any time to collapse.” The elevator was completed in September 1954 and less than a month later “settled, cracked and broke in numerous places,” the Dayton company alleges in the petition.

At the time the elevator was found to be damaged it was loaded with 110,000 bushels of corn and 30,000 bushels of beans.

Farmers’ Elevator Guide, v.48-50, 1953-55 p. 61 

130-foot fall claims Larry Ryan’s life in Pochahontas, Iowa

Worker Is Killed in Fall From Elevator

Pochahontas, Iowa –(AP)–A 130-foot fall from the top of the Farmers Co-operative Elevator, under construction here, claimed the life Wednesday of Larry Ryan, 20, of Cassville, Mo.

Ryan, an employe of Tillotson Construction Co., Omaha, was operating a hoist used to raise supplies to the top of the elevator. Cause of the accident was not immediately learned.

Muscatine (Iowa) Journal

Thursday, July 29, 1954