Court Opinion

ID: 4620844
Source: CourtListenerOpinion
Date Created: 2020-11-21 02:43:29.020138+00
Date Added: 2024-06-11T07:55:54.293173
License: Public Domain

Arthur S. and Josephine G. Kennedy v. Commissioner. *Arthur S. & Josephine G. Kennedy v. CommissionerDocket No. 14399.United States Tax Court1948 Tax Ct. Memo LEXIS 98; 7 T.C.M. 632; T.C.M. (RIA) 48172; August 31, 19481948 Tax Ct. Memo LEXIS 98">*98  Preston D. Orem, Esq., for the petitioners. H. Arlo Melville, Esq., for the respondent.  LEMIRE Memorandum Findings of Fact and Opinion The respondent has determined income tax deficiencies for 1943 and 1944 in the respective amounts of $441.27 and $563.76, plus a 5 per cent negligence penalty for each of such years. A motion by the respondent, filed after the hearing, to amend the pleadings to conform with the proof and to assert a 50 per cent fraud penalty in each of the taxable years was denied August 3, 1948.  Findings of Fact The petitioners during the taxable years involved were residents of California and were living together as husband and wife. They filed joint returns for each of the years with the collector at Los Angeles. They have since been divorced. On their returns for the taxable years the petitioners reported joint income from their employment as welders in the amounts of $5,384.26 for 1943 and $5,523.47 for 1944. They claimed deductions in their returns for each of the years as follows: ITEMS19431944ContributionsCatholic Church$ 52.00$104.00Red Cross30.0030.00Salvation Army30.0030.00China Relief5.005.00U.S.O.25.0030.00Tuberculosis Society2.002.00 lD.A.V.5.003.00Community Chest5.005.00March of Dimes3.005.00P.T.A.5.006.00Elks and Eagles20.00Elks Lodge20.00American Legion1.00Veterans of Foreign Wars2.502.00Rescue Mission1.002.00War Chest17.0024.00Soldiers and Sailors Relief2.502.00Army and Navy Relief2.502.00St. Vincent De Paul forItalian Relief200.00Examiner's Xmas Fund forWar Wounded10.00Total Contributions$207.50$483.00InterestMortgage on Home75.0073.80Car Contract (Seaboard Fi-nance)35.00Car Contract (Bank ofAmerica)40.00Furniture (Seaboard Fi-nance)40.0033.90Personal Loan (Bank ofAmerica)Total Interest$150.00$147.70TaxesReal Estate35.7536.90Personal Property3.253.25Licenses12.80Licenses (3 cars)43.20Telephone1.00Train Fare16.00Amusement30.00Federal Use10.0015.00Sales Tax65.00Sales Tax (Extra Pur-chases)100.00City Tax3.50City License2.00Total Taxes$177.30$200.35LossesClothing burned at work100.00120.00Roof blown off by wind18.00Ran into a bank in Ocean-side going at 15 mi. pr.hr. because of slipperypavement25.00Small tools stolen at work20.00Total Losses$118.00$165.00Deductible ExpensesProtective Clothing: Helmet25.0012.50Leather Suits79.0030.00Special Work Shoes80.0050.00Repairing Work Shoes20.0012.00Gloves40.0036.00Goggles40.007.00Rubber Hat2.00Rubber Coat8.00Laundry of WorkingClothes (Only)156.00156.00Kit of Tools - Value $150(Depreciation 3 yrs.)58.00Kit of Tools - Value $175(Depreciation 3 yrs.)58.00Tools - Yearly Depreciation15.0010.001938 Olds. - Value $400,used for work (Depre-ciation)200.001944 LaSalle - Value $1,000,used for work (Deprecia-tion)200.00Gasoline220.00200.00Oil18.0018.00Repairs80.0060.00Auto Insurance34.00Accident Insurance60.00Union Dues168.00125.00Unemployment Insurance49.84Total Deductible Ex-penses$1,269.00$1,058.34MedicalDr. R. W. Shaeffer - $250;Anes. - $20 - Redondo270.00Torrance Hospital - $100;Gratuity - $10110.00Prescriptions, Medicine,and Vitamins60.00Total Medical$440.001948 Tax Ct. Memo LEXIS 98">*99  The returns for both years were prepared for the petitioners by Edward W. Jackson, described as a Notary Public, who called at their home with a printed questionnaire which he helped them to fill out. This questionnaire contained space for listing income and vaious types of deductions, under the headings, Contributions, Interest, Taxes, Bad Debts, and others. Under Contributions, for example, were the following items, as filled out by the petitioners for 1943: CONTRIBUTIONSCatholic Church$52.00China Relief5.00Tuberculosis Society2.00Orthopedic HospitalMarch of Dimes3.00Birth ControlMilk FundsPolitical OrganizationSoldiers and Sailors Relief2.50Red Cross30.00Greek ReliefD.A.V.5.00D.A.R.P.T.A.5.00American LegionResearchRescue Mission1.00Army and Navy2.50Salvation Army30.00U.S.O.25.00Community Chest5.00Goodwill Society10.00Boy ScoutsFrat. Org.20.00Vets. Foreign Wars2.50Cruelty to AnimalsWar Chest17.00MiscellaneousElksThe petitioners' returns were made up by Jackson from these questionnaires. He signed the returns, along with the petitioners, as the person preparing them. 1948 Tax Ct. Memo LEXIS 98">*100  In his audit of the returns the respondent disallowed all of the deductions claimed for both years. The petitioners alleged in the original petition filed in this proceeding that the respondent erred in disallowing "each and every item" claimed in the return and further alleged, as facts, that "our returns were honestly made. We will prove that we are one of a group of taxpayers who are being persecuted without cause." On motion of the respondent to dismiss the proceeding for failure of the petitioners to comply with the Court's Rules of Practice (Rule 6(d), 6(e), and 6(i), the petitioners filed an amended petition which provides in paragraphs 4 and 5 as follows: "4. The determination of tax set forth in the said notice of deficiency is based upon the following errors: Internal Revenue Department's disallowance of 1. contributions, 2. interest, 3. taxes, 4. losses, 5. miscellaneous expenses, 6. business expenses, 7. medical expenses, in the amounts of 1. contributions 955.50, 2. interest 431.49, 3. taxes 485.70, 4. losses 433.00, 5. medical expense 524.03 and 6. miscellaneous expense 2968.73. "5. The facts upon which the petitioner relies as the basis of this proceeding are1948 Tax Ct. Memo LEXIS 98">*101  as follows: with 1. receipts, 2. affidavits and 3. witnesses I/we will prove that our returns were correctly and honestly made, and that we are one of a group of segregated taxpayers who are being persecuted for a purpose foreign to our tax returns; that the Department's notice of deficiency is in the hands of the Tax Court or is attached hereto.  We further rely upon the fact that we did make the 1. contributions amounting to 955.50, 2. paid interest 431.49, 3. paid taxes 485.70, 4. suffered losses 433.00, 5. had net medical expense 2968.73 and our 1945 overassessment should have been 338.50 instead of 21.93. *" Both the original and amended petitions were prepared on printed forms furnished by Jackson and signed by him as Notary Public. The respondent's motion to dismiss was denied November 19, 1947. Opinion LEMIRE, Judge: By disallowing the deduction of all the items claimed by the petitioners in their returns the respondent put the petitioners on their proof of the facts essential to the allowance of the deductions. The only evidence furnished, or offered, by the petitioners is the oral testimony of petitioner, Arthur S. Kennedy. This testimony consists of uncorroborated1948 Tax Ct. Memo LEXIS 98">*102  statements by the witness that the disputed expenditures or contributions were actually made, or the losses sustained, as claimed in the returns. These statements, for the most part, were elicited by counsel in an item by item interrogation, based on the returns themselves. The witness admitted that he had no independent recollection of many of the items claimed in the returns. He had no receipts or authenticating records of any description. He claimed that the receipts which he once had were last seen in the possession of his wife. He did not know her present whereabouts. He had made no effort to secure duplicate receipts or any other written matter verifying his alleged charitable contributions, or other items claimed in the returns. He admitted that most of these items were nothing more than estimates. In the circumstances of this case the type of evidence furnished by the petitioners is of little, if any, value. Certainly, it does not meet the burden of proof resting upon the petitioners to establish their legal rights to the deductions claimed. The evidence as a whole not only leaves considerable doubt as to the factual basis for many of the deductions claimed but it convinces1948 Tax Ct. Memo LEXIS 98">*103  us that the petitioners themselves gave but little serious attention to the preparation of their returns. Notwithstanding the unsatisfactory state of the petitioners' proof, we are convinced that they are entitled to some of the deductions which the respondent has disallowed. We are satisfied, for instance, that in their trade as welders the petitioners were required to provide themselves with certain articles of protective clothing, such as, leather suits, helmets, and gloves; that they were required to pay certain taxes, such as, sales tax and automobile license; and that they made some contributions to recognized charities. The respondent concedes on brief that the petitioners are entitled to a portion of some of the items claimed in their returns. From such means as the evidence affords us we have concluded that the aggregate of the deductions of all classes to which the petitioners are entitled in each of the taxable years is not in excess of $750. We think that the respondent has correctly imposed the 5 per cent negligence penalty. Decision will be entered under Rule 50.  Footnotes*. Opinion is vacated pursuant to Tax Court order dated September 30, 1948.↩