Facts
The appellants [A.] and [B.] submitted a tax return to the tax administration of the canton of Basel-Stadt for the year 1999, in which they declared a taxable income of CHF 56'936.--. The tax administration set the taxable income at CHF 90'600.--. Later, it became known that [A.] had sold import and distribution rights as well as part of the inventory of his individual company for CHF 200'000.-- in March 1999. The tax administration then issued an additional tax and penalty ruling, in which it set the taxable income at CHF 290'600.-- and imposed an additional tax of CHF 25'200.70 and a penalty of CHF 23'940.65.
The appellants lodged an objection, which was rejected. Subsequently, they appealed to the Tax Appeals Commission of the canton of Basel-Stadt, which set the penalty at 80% of the additional tax amount. The appellants then filed an administrative court appeal with the Federal Court.
Considerations
The Federal Court examined the admissibility of the administrative court appeal and found that the appellants, as taxpayers, were entitled to file the appeal. The court applied federal law ex officio and examined the complaint of violation of federal law.
The court concluded that the proceeds from the sale of the import and distribution rights constituted a capital gain and were part of the taxable income from self-employment, which was realized in the tax year 1999. The tax administration of the canton of Basel-Stadt had therefore rightly issued an additional tax and penalty ruling.
However, the court also examined whether the tax administration had…