Case ID: bta_2/html/1265-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Appeal of M. P. G. HILLMAN.
    Docket No. 2372.
    Submitted September 16, 1925.
    Decided November 9, 1925.
    
      Theodore H. Benson, Esq., for the taxpayer.
    
      Robert A. Littleton, Esq., for the Commissioner.
    Before Littleton, Smith, and Teussell.
   This appeal is from the determination of a deficiency in income tax for the year 1920 in the amount of $1,105.22.

FINDINGS OF FACT.

During the year 1920, the taxpayer was a member of the firm of Carpenter & Hillman, Birmingham, Ala. In his income-tax return for 1920, he reported income from the partnership in the amount of $5,611. He was taken ill during the fall of the year with influenza and was left with a severe affliction of the heart. He was advised by his physician to give up his business and in December, 1920, went to California. Since 1920 he has been a resident of San Francisco. When he left Alabama he authorized his attorney to settle up all business matters. The partnership was dissolved. The other member of the partnership filed a partnership return on Form 1065 for 1920, which showed no gross income but a deduction on line 14 for compensation of members of $5,000 each. It also showed on line 23, under “ profit or loss on sale of capital assets and miscellaneous investments,” $10,574.18, and under Schedule “ C,” members’ shares of income, $5,287.09 to each partner. The taxpayer can not now tell the amount of income he received in 1920 from the partnership. The partnership books of account have been lost or destroyed.

During the year 1920 the taxpayer was on the pay roll of the Sloss-Sheffield Steel & Iron Co. as a consulting engineer at a salary of $3,000. The canceled checks of the Sloss-Sheffield Steel & Iron Co. submitted in evidence show that the checks were drawn to the taxpayer but endorsed in the name of the partnership and deposited with partnership moneys. The taxpayer did not report in his individual income-tax return the receipt of this income. The Commissioner has added to the taxpayer’s income the $3,000 in question.

The $3,000 paid for the services of the taxpayer during the year 1920 by the Sloss-Sheffield Steel & Iron Co. was partnership income and was distributed as such.

The taxpayer received a salary of $5,000 from the partnership of Carpenter & Hillman, which he erroneously failed to return in his income-tax return.

DECISION.

The deficiency should be computed by excluding from gross income the sum of $3,000 included therein by the Commissioner. The amount of the deficiency will be settled on 15 days’ notice, in accord- ■ anee with Rule 50.