Opinion ID: 1484845
Heading Depth: 1
Heading Rank: 4

Heading: Number 3821 Fred D. Clemons

Text: Beginning in 1940, through 1944, petitioner Clemons owned and operated what was known as the Overflow Club outside the city limits of Wichita. He sold liquor by the drink in the front end, and conducted gambling in the rear. The bank roll for the gambling was furnished by Carnahan, and he, on behalf of himself and Cohen, received a stipulated percentage of the winnings. In his income tax returns for the years 1940 to 1944, inclusive, Clemons did not include in his gross income amounts paid to Carnahan, on the theory that the gambling winnings represented partnership income. The Commissioner assessed deficiencies, claiming that all of the income accrued to Clemons as the owner of the establishment, and the amounts paid to Carnahan were nondeductible payments for protection. The Tax Court allowed the legitimate expenses for the operation of the business, but approved the deficiencies for the amounts paid to Carnahan and Cohen for the reason stated in the Carnahan and Comeaux cases, and its decision thereon is affirmed for the same reason.