Case Name: Hammack, Rish Sons Co., Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1927-04-26
Citations: 6 B.T.A. 1054
Docket Number: Docket No. 10516
Parties: Hammack, Rish Sons Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: 
Reporter: Reports of the United States Board of Tax Appeals
Volume: 6
Pages: 1054–1056

Head Matter:
Hammack, Rish Sons Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 10516.
Promulgated April 26, 1927.
FrcmJc Reagan, Esq., for the petitioner.
A. H. Murray-, Esq., for the respondent.

Opinion:
OPINION.
SteRnhagen :
The total tax for 1917, as shown in the deficiency notice, is less than the tax shown on petitioner's return plus amounts previously assessed as deficiencies. Respondent's motion to dismiss the appeal as to 1917 is granted and order will be entered accordingly. Appeal of R. P. Hazzard Co., 4 B. T. A. 150; Appeal of Cornelius Cotton Mills, 4 B. T. A. 255.
As the basis for the determination of the deficiency for 1919, the Commissioner caused an examination to be made of the petitioner's books, and found that the original return covered the period from January 16 to December 31, inclusive, by reason of the fact that the petitioner, on January 16, inaugurated a new set of accounts. Finding that the items of income for the period January 1, 1919, to January 15, 1919, had been omitted in the petitioner's computation of taxable net income, the Commissioner added to income the amount of $5,882.56, alleged to represent the sales of the fifteen-day period which had been omitted from the original return. The petitioner, at the hearing, presented in evidence the merchandise purchase and sales accounts for the fifteen-day period in question, from which it appears that the gross sales amounted to $6,769.57, and the gross purchases to $3,462.59. We have found, therefore, that the revision of the net income resulting from the inclusion of the fifteen-day period should be accomplished in part by increasing it by the difference between these two amounts, namely, $3,306.98, and not by the amount asserted in the deficiency notice of $5,882.56. This means that the Commissioner overstated the net income in this respect by the difference between $5,882.56 and $3,306.98, or $2,575.58.
Petitioner contends that the net income shown in the deficiency notice should be further reduced by $992.40, representing general expenses, salaries, office expenses, and advertising, of the fifteen-day period, but proof of the failure of the Commissioner to allow these expenses as deductions is lacking.
The petitioner does not dispute the correctness of the amounts by which the Commissioner has reduced invested capital for 1919, because of income and profits taxes for prior years, but merely questions the right of the Commissioner to make such a reduction. No evidence was offered to show that the Commissioner's action is not in accordance with Appeal of Russel Wheel & Foundry Co., 3 B. T. A. 1168.
Judgment udll be entered on W days' notice, under Rule 50.