Source: https://casetext.com/case/schoenberg-v-cir
Timestamp: 2019-03-18 22:07:27
Document Index: 573221457

Matched Legal Cases: ['§ 294', '§ 294', '§ 294', '§ 61', '§ 22', '§ 22', '§ 7482', '§ 7482']

Schoenberg v. C.I.R, 302 F.2d 416 | Casetext
Schoenberg v. C.I.R
302 F.2d 416 (8th Cir. 1962)
Schoenbergv.C.I.R
United States Court of Appeals, Eighth CircuitApr 24, 1962
V.E. Phillips, Kansas City, Mo., made argument for petitioner and filed brief.
Taxpayer Albert Schoenberg has filed timely petition for review of the decision of the Tax Court filed August 21, 1961, (T.C. Memo 1961-235, not officially reported) determining deficiencies in tax in the amount of $44,018.48 for the year 1952 and $6646.26 for the year 1954, plus additions for each year under § 294(d) (2) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 294(d) (2). Jurisdiction is established.
The § 294(d)(2) additions are for substantial under-estimation of estimated tax. The validity of such additions is dependent upon whether the deficiencies were properly determined.
Taxpayer challenges the validity of the Tax Court's decision, asserting in substance that he overcame any burden of proof resting upon him to overcome the presumption of correctness of the Commissioner's determination by introducing paper evidence clearly showing Marie Letourneau to be the owner of the profits which the Commissioner was seeking to collect from him and by his uncontradicted testimony that the real interests of the parties were those set out in the written documents. Taxpayer contends that the Tax Court erred in finding that the 50 percent of the profits from the sale of the real estate, which the documentary evidence showed to be the property of Marie Letourneau, was income of the taxpayer taxable as ordinary income.
No contention was made in the Tax Court nor here that the profits were entitled to long term capital gain treatment.
The definition of income in the revenue statutes is very broad. Section 22, I.R.C. 1939, § 61, I.R.C. 1954, 26 U.S.C.A. §§ 22, 61. See Helvering v. Clifford, 309 U.S. 331, 334, 60 S.Ct. 554, 84 L.Ed. 788. If the taxpayer is the real owner of one-half of the profits from the sale of the real estate, a tax upon his interest would be appropriate regardless of what the exhibits in evidence might show as to paper ownership. The Tax Court in effect found that the taxpayer rather than Miss Letourneau was the real owner of the one-half of the profits. If there is substantial evidence to support such finding, the decision of the Tax Court is entitled to be affirmed.
"Substance and not form controls in applying income tax statutes and `the realities of the taxpayer's economic interest, rather than the niceties of the conveyancer's art, should determine the power to tax.' Helvering v. Safe Deposit Trust Co. of Baltimore, 316 U.S. 56, 58, 62 S.Ct. 925, 86 L.Ed. 1266." Paster v. Commissioner, 8 Cir., 245 F.2d 381, 387.
"[A]s to transactions within such a group `special scrutiny of the arrangement is necessary lest what is in reality but one economic unit be multiplied into two or more by devices which, though valid under state law, are not conclusive so far as § 22(a) is concerned.' Helvering v. Clifford, 309 U.S. 331, 335, 60 S. Ct. 554, 84 L.Ed. 788." Paster v. Commissioner, 8 Cir., 245 F.2d 381, 387.
The standards for review of fact findings of the Tax Court are well established. Decisions of the Tax Court are reviewable in the same manner and to the same extent as decisions of the district court in civil actions tried without a jury. § 7482, I.R.C. 1954, 26 U.S.C.A. § 7482. If the Tax Court's findings are supported by substantial evidence upon the record as a whole, and are not against the clear weight of the evidence or induced by an erroneous view of the law, they cannot be upset. Sachs v. Commissioner, 8 Cir., 277 F.2d 879, 881; Kemper v. Commissioner, 8 Cir., 269 F.2d 184, 185.
4. At the time the profits were realized, Miss Letourneau made loans to the taxpayer which when added to the income tax she paid upon the profits practically equalled the total of the profits.
We have serious doubt whether in a situation such as is presented here, where the witness was apparently equally available to both parties, any presumption should flow from the failure of either party to call such witness. Any rule creating a presumption from failure to produce a witness must be applied with caution. See Mammoth Oil Co. v. United States, 275 U.S. 13, 52, 48 S.Ct. 1, 72 L. Ed. 137; Johnson v. United States, 8 Cir., 291 F.2d 150, 155, and cases there cited.