Case Name: Appeal of BRUCE & HUMAN DRUG CO.
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1925-01-16
Citations: 1 B.T.A. 342
Docket Number: Docket No. 129
Parties: Appeal of BRUCE & HUMAN DRUG CO.
Judges: Before James, Sternhagen, and Trussell.
Reporter: Reports of the United States Board of Tax Appeals
Volume: 1
Pages: 342–346

Head Matter:
Appeal of BRUCE & HUMAN DRUG CO.
Docket No. 129.
Submitted November 20, 1924;
decided January 16, 1925.
Mr. L. C. Perry, for the taxpayer.
Willis D. Nance, Esq. (Nelson T. Hartson, Solicitor of Internal Revenue) for the Commissioner.
Before James, Sternhagen, and Trussell.

Opinion:
OPINION.
James:
There were introduced in evidence depositions «of the president of the_ taxpayer, its secretary, the auditor who made the examination of its books, and the head of the accounting firm employed for such examination. These depositions show that the audit was made upon a basis which could never prove any income inconsistent with the reconcilement of surplus as between the beginning and end of the year. The depositions also show that the auditor made no examination of the balance sheets at the beginning and end of each of the several years and therefore could not certify to their correctness or prove, by the audit he made, the correctness of the net income of the taxpayer which his audit purported to show.
There was also introduced in evidence the report of the examining revenue agent. This report shows that the net income ascertained by him was arrived at by adding certain alleged omissions of income to the net income returned by the taxpayer on his original return, without a verification of the entire- net income, either by an examination of all the income and expenses, or by a proof of the opening and closing balance sheets.
We are satisfied from the entire record that the proposed deficiency is not well founded and it must, therefore, be disallowed.